142

It's important to remember what a share is. It's a tiny portion of ownership of a company. Let's pretend we're talking about shares in a manufacturing company. The company has one million shares on its register. You own one thousand of them. That means that you own 1/1000th of the company. These shares are valued by the market at $10 per share. The ...


115

Stephen's answer is the 100% correct one made with the common Economics assumption, that people are rational. A company that never has paid dividends, is still worth something to people because of its potential to start paying dividends later and it is often better to grow now and payoff later. However, the actual answer is much more disapointing, because ...


60

No, you're not entitled to the dividend payment, as you bought the shares after the "Ex-Dividend" Date. The price you paid for the stocks should have been reduced accordingly to reflect that. Declaration date: When the company says how much the dividend will be. Absent some catastrophic event after that, this is a promise that they will pay this much as a ...


59

Is it legal to buys Stock A on June 30th, sells it on July 2nd, then buy Stock B on July 14th, sells it on July 16th, then buys Stock C on July 30th, sells it on August 2nd... and continues this process to “mine” dividend payouts? Yes it is legal to do this. If a person is allowed to buy and sell shares they can do exactly this. They still have to ...


51

The main reason, as far as I can see, is that the dividends are payments with which the shareholders may do what they want. Capital that the company has no use for does not make a significant positive return on investment, as you pointed out, yes the company could accrue interest, but that is not going to make the company large sums of cash. While the ...


50

Buying individual/small basket of high dividend shares is exposing you to 50%+ and very fast potential downswings in capital/margin calls. There is no free lunch in returns in this respect: nothing that pays enough to help you pay your mortgage at a high rate won’t expose you to a lot of potential volatility. Main issue here looks like you have very poorly ...


48

Not minutes, but hours. The "ex-dividend" date is the deadline for acquiring a stock to receive a dividend. If you hold a stock at the beginning of this day, you will receive the dividend. So you could buy a stock right at the end of the day on the day before the ex-dividend date, and sell it the next day (on the ex-dividend date), and you would get your ...


43

First, you need to understand that not every investor's goals are the same. Some investors are investing for income. They want to invest in a profitable company and use the profit from the company as income. If that investor invests only in stocks that do not pay a dividend, the only way he can realize income is to sell his investment. But he can invest in ...


42

When you invest in stocks, there are two possible ways to make money: you resell the shares at a higher price than you bought them you get dividends Many people speculate just on the stock price, which would result in a gain (or loss), but only once you have resold the shares. Others don't really care about the stock price. They get dividends every so ...


41

Generally, it is considered a bad idea to put significant parts of your money in your own employer's stock, no matter how great the company looks right now. The reason is the old 'don't put all your eggs in one basket'. If there is ever a serious issue with your company, and you lose your job because they go down the drain, you don't only lose your job, but ...


41

Is this possible (for a single-person corporation) in United States? Yes, but if the salary you pay yourself is too low then you risk getting flagged for not providing yourself with reasonable compensation. A lot of resources recommend you that you pay yourself partially in dividends to avoid some taxes, as you mentioned is possible in the UK. However if ...


38

You have to be the owner of record before the ex-dividend date, which is not the same day as the date the dividend is paid. This also implies that if you sell on or after the ex-dividend date, you'll still get the dividend, even if you no longer own the stock. Keep in mind, also, that the quoted price of the stock (and on any open orders that are not ...


37

The market is not stupid. It realises that a company is worth less after paying out dividends than before paying them. (It's obvious, since that company has just given out part of its earnings.) So after a company pays out dividends, its stock price normally drops approximately by the amount paid. Therefore if you buy, get the dividend, and immediately ...


36

It doesn't go anywhere. It stays in the company as undistributed profit. If the company has too much cash and no opportunities to invest it in further growth, it can be harmful to the company's return on equity. Therefore typically the company will sooner or later choose to distribute it to shareholders either in the form of (regular or extraordinary) ...


35

If you assume the market is always 100% rational and accurate and liquid, then it doesn't matter very much if a company pays dividends, other than how dividends are taxed vs. capital gains. (If the market is 100% accurate and liquid, it also doesn't really matter what stock you buy, since they are all fairly priced, other than that you want the stock to ...


33

Yes. Companies increase, decrease, start paying and stop paying dividends when they think it appropriate. If a company has been going through some problems and makes a loss, or even a large decrease in profits, they can choose to stop paying dividends until things improve. Many companies did this during the Global Financial Crisis of 2007-08.


29

It seems to me that your main question here is about why a stock is worth anything at all, why it has any intrinsic value, and that the only way you could imagine a stock having value is if it pays a dividend, as though that's what you're buying in that case. Others have answered why a company may or may not pay a dividend, but I think glossed over the ...


28

You can buy any or all of those stocks if you have the cash (or margin) to do so. But why would you, just because they pay a dividend? Suppose you buy stock (A) at the close today for $100 and tomorrow it pays a quarterly dividend of $1. Tomorrow's adjusted close will be $99. If there is no buying or selling pressure when trading resumes in the morning, ...


24

Single proprietorships, even if they are incorporated as a limited-liability corporation (LLC), and especially those in which the proprietor is the sole employee, are usually treated as pass-through entities by the IRS, and any "dividends" paid by the LLC to its sole shareholder are deemed to be self-employment income for the proprietor, and not dividends at ...


23

A dividend is a cash disbursement from the company. The value of the company goes down the same amount of the dividend, so it is analogous to having money in a savings account and taking a withdrawal every month. Obviously you are going to have less in the end than if you just kept the money in the account. suppose that I own 10 different stocks, and ...


22

Instead of giving part of their profits back as dividends, management puts it back into the company so the company can grow and produce higher profits. When these companies do well, there is high demand for them as in the long term higher profits equates to a higher share price. So if a company invests in itself to grow its profits higher and higher, one of ...


22

For a Roth IRA, everything withdrawn is tax free as long as you meet the age/time requirements. You are correct that the contributions have been taxed; but the dividends, interest, and growth due to the price of the underlying securities are also tax free. Also note - the key age is 59-1/2 for this to be true. 70-1/2 is when RMDs (required minimum ...


21

Write to the registrar of the company. They will arrange a fresh cheque. If your mother is holding physical shares convert them to demat. Dividend are electronically credited to your account.


21

They are distributed to investors much like any other mutual fund, same thing with capital gains, although those distributions tend to be lower in value. Here is some info from the Fidelity S&P 500 fund: Note that you may not see the dividends in your cash account because they are typically reinvested. In Fidelity, the default is to reinvest ...


20

This is an excellent question, one that I've pondered before as well. Here's how I've reconciled it in my mind. Why should we agree that a stock is worth anything? After all, if I purchase a share of said company, I own some small percentage of all of its assets, like land, capital equipment, accounts receivable, cash and securities holdings, etc., as ...


19

Yes, the stock price drops on the ex-dividend date by roughly the amount of the dividend. There is even academic research testing this and confirming that the popular rule of thumb works well.


19

Do you see how VOO and SPY don't have the same price? Say you and I both start an S&P index ETF. For sake of easy paperwork, and to discourage small customers, you sell shares at a starting value of $10,000. But, I like the little guy and start at $10. Your dividends per share will be 1000 times mine. But, if my customer hold 1000 shares, and you have ...


19

If a company earns $1 Million in net profit (let's say all cash, which is not entirely realistic), it can do one of three things with it: Invest it back in the company (by buying more assets to generate future profits or paying off debt to reduce interest expense) Distribute it to shareholders (dividends, stock buyback) Do nothing (keep it as cash) On the ...


18

There are many reasons for buying stock for dividends. You are right in the sense that in theory a stock's price will go down in value by the amount of the dividend. As the amount of dividend was adding to the value of the company, but now has been paid out to shareholder, so now the company is worth less by the value of the dividend. However, in real life ...


16

Yes, you would. You owe it to the person you borrowed the shares from. (source)


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