39
votes
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out?
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 ...
- 1,028
38
votes
Accepted
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out?
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 ...
- 3,795
33
votes
Accepted
Why aren't non-dividend stocks ponzi assets?
I started to close this as a duplicate of If a stock doesn't pay dividends, then why is the stock worth anything?, but then realized that it is a slightly different question:
suppose a stock price ...
- 113k
21
votes
If an investor does not need an income stream, do dividend stocks have advantages over non-dividend stocks?
There is not a direct advantage (meaning that do not produce actual wealth as you mention), but it can be an indication that the company is a good stable investment. If a company pays dividends, then ...
- 113k
19
votes
Accepted
Are dividends exclusively a part of earnings?
In the end it comes out of earnings, but the earnings don't have to be made that financial year. So yes you can pay dividends despite negative, zero or low earnings in a specific year. This can be a ...
- 939
18
votes
Are dividends exclusively a part of earnings?
Cash dividends are paid from the company's cash on hand. It doesn't matter where that money comes from. You might have earned it that year, previous years, or (rarely and foolishly) borrowed it or ...
- 48.7k
13
votes
Why aren't non-dividend stocks ponzi assets?
Ultimately, if you own the company, you can vote to shut down the company, sell everything it owns and give the money to the shareholders.
You can also vote for the company to start paying dividends.
...
- 1,514
12
votes
Accepted
What does Dividend 165% mean in stock market?
Do not confuse the DIV (%) value and the dividend yield.
As you can see from this page, the DIV (%) is, as you say, 165%. However, the dividend yield is 3.73% at the time of writing.
As the ...
- 3,943
8
votes
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out?
The ex-dividend date, prevents this, but people are still able to do this and this is an investment strategy.
There are some illiquid and immature markets where prices don't adjust.
In the options ...
- 20.1k
8
votes
Accepted
Does this analogy accurately explain stock ownership?
No, your analogy is not the same as buying a non-dividend-paying stock.
A better analogy would be you buy 50% of a house where the profits all go in a bank account that you "own" half of but ...
- 113k
8
votes
If an investor does not need an income stream, do dividend stocks have advantages over non-dividend stocks?
It avoids building castles in the air
Extremely simplified: there are two factors contributing to a stock price. The first part is a fundamental value, based on the company's earnings, its dividend, ...
- 6,678
7
votes
What are the implications for GameStop as a company in the aftermath of the current share price surge?
They had a lot of free advertisement on the international press and the web.
People like me, who never heard of GameStop before, now know what they sell (used games, consoles, etc.), how they do it (...
- 79
7
votes
Why aren't non-dividend stocks ponzi assets?
So my question is... suppose a stock price were to continuously drop despite high company performance (profits)... Is there something the shareholders can do to get some share of the profits?
This ...
- 1,660
6
votes
Accepted
When short selling a dividend stock, what is the earliest date to cover and break even
When buying stocks the latest you need to buy to get the dividends is the day before the ex-dividend date. If you buy on the ex-dividend date you will miss out on the dividends.
So if you are ...
- 20.8k
6
votes
Why aren't non-dividend stocks ponzi assets?
This is a really common idea that I've seen lately. It's usually part of a rationalization about how owning stock in a company is no different than owning something that is only worth what someone ...
- 3,419
5
votes
Why are dividends seen as a good thing for investors?
Investors have different targets, and for some a continuous stream of dividends is more important than the value gain of the share itself.
For example, AT&T is a well known provider of 50 cent ...
- 36.7k
5
votes
If an investor does not need an income stream, do dividend stocks have advantages over non-dividend stocks?
Just for clarification, a stock's share price drops by the exact amount of the dividend on its ex-dividend date. When trading begins anew that morning, the stock may go up, down or be unchanged.
You ...
- 73.6k
5
votes
Why aren't non-dividend stocks ponzi assets?
Dividends and speculation aren't the only upsides to owning a stock.
The company could decide to execute a stock buyback. This will increase demand for the stock you own and drive up the price.
The ...
- 3,591
4
votes
Formula to compare the potential earnings of buying the same stock at different prices
If you think that the stock is, on average, going to go up, then not buying it immediately represents a loss of expected value. If you don't think the stock is going up, then you shouldn't buy it at ...
- 8,753
4
votes
Does all stock have dividends? and what is the most intelligible definition and concept of dividend?
Not all stocks pay dividends.
Remember that stocks represent ownership of a company. If a company issues 1,000 shares of stock and you own 100 of them, you own 10% of the company.
A dividend is when a ...
- 113k
3
votes
How do ETF dividends work
You assumed correctly that they are pooled together. Here's some more info just in case:
Just like a regular stock, an ETF will have an ex-dividend date, record date and payment date.
All dividends ...
- 202
3
votes
How do ETF dividends work
There are two main solutions: pay out, and reinvest. In one case, the ETF investors get cash; in the other case the ETF gains in value as it holds more of the underlying assets. Each ETF will document ...
- 2,633
3
votes
What are the risks of Dividend-yielding stocks?
Yep, there just is no free lunch.
So called high dividend stocks are usually from companies that have stable cash flows but relatively little or moderate growth potential. Utility companies come to ...
- 1,179
3
votes
Accepted
Understanding "Last Dividend Reported" in Bloomberg's database
Yes it is dividend per a share. Without knowing the company or at least the share price it's hard to be more precise. And each site has their own formula for calculating the various ratios. Bloomberg ...
- 547
3
votes
Understanding "Last Dividend Reported" in Bloomberg's database
Yes, it is the dividend per share, in dollars (assuming a U.S. stock), usually paid quarterly. For most stocks, if you multiply that number by 4 and divide by the stock price, you will get the ...
- 2,799
3
votes
How can one protect oneself from a dividend stock with decreasing price?
Your question reminds me of a Will Rogers quote:
buy some good stock, and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.
There's no way to prevent yourself from buying a ...
- 113k
3
votes
Shares in stock exchange and dividend payout relationship
It would be 0.22 * Rs 5 per share, i.e. Rs 1.1 per share. For 1000 share it would be Rs 1.1 * 1000, i.e. 1100
- 56.5k
3
votes
After a stock dividend, how do you calculate holding periods for capital gains taxes?
Stock acquired through a (non-taxable) stock dividend has the same holding period as the stock on which the dividend was paid.
- 127k
3
votes
How much money do I need to generate $1500 per month in dividends for the rest of my life?
One practical solution is to invest in an ETF like DGRO. Currently it is yielding 2.29%, so to live off of divdends, you have:
(1500*12) / .0229 = 786,000.
At $500/month, you have some work to do.
- 74.9k
3
votes
Accepted
What are the implications for GameStop as a company in the aftermath of the current share price surge?
A company's share price typically has 2 impacts on its internal operations:
(1) If it needs additional funding to accomplish its goals [like expanding to new locations], then it could do that by (i) ...
- 37k
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