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Thread: Dividend Stocks

  1. #13

    Default Re: Dividend Stocks

    Quote Originally Posted by VirginiaBob View Post
    What is the rules for getting a dividend anyways? Do you only need to own the stock for one day to get it? If so, why doesn't everyone just buy the stock for the day the dividend pays? Probably something like the share price takes a hit the same day the dividend pays?
    Interesting question. Id be interested in hearing peoples thoughts/experiences with it.

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  3. #14

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    Default Re: Dividend Stocks

    Most individual stocks post a day of record for the dividend payment. If you own the stock during this period of time and sell within that window you will still receive the dividend. Most stocks will increase their dividends yearly. I know one fellow with a Sharbuilder deferred account with 46 stocks and he takes down 184 dividend hit/year. It's money coming in all the time. That day of record should read date of record. And I almost forgot some stocks will reach a certain level in price and do a split. I have one splitting tomorrow 2 for 1.

    Virginia bob,

    Take a look at EBF or AP, they've both done well for me and I continue to hold them both.

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  5. #15

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    Default Re: Dividend Stocks

    Quote Originally Posted by Birchtree View Post
    Most individual stocks post a day of record for the dividend payment. If you own the stock during this period of time and sell within that window you will still receive the dividend. Most stocks will increase their dividends yearly. I know one fellow with a Sharbuilder deferred account with 46 stocks and he takes down 184 dividend hit/year. It's money coming in all the time. That day of record should read date of record. And I almost forgot some stocks will reach a certain level in price and do a split. I have one splitting tomorrow 2 for 1.

    Virginia bob,

    Take a look at EBF or AP, they've both done well for me and I continue to hold them both.
    How do you know when they'll split?? I'll admit I just opened a sharebuilder account. Stuck between one time buying and the investing over a stock monthly. Need more capitol for sure in the money market account w/sharebuilders.
    "The entire essence of America is the hope to first make money -- then make money with money -My Account- then make lots of money with lots of money." Talk about it

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  7. #16

    Default Re: Dividend Stocks

    O gurus of the market! I understand the date of record concept i.e. if you own the stock on the date of record you get the dividend. The one I have a problem with is the "ex-dividend date". As I understand it, it is a date set by the brokerage to allow for processing of transactions prior to the date of record? Appears that the share price is adjusted to account for the fact that it is being sold ex- or without dividend? Is my understanding correct? I generally avoid doing transactions within a week or so of the date of record to keep from getting an unexpected result.

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  9. #17

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    Default Re: Dividend Stocks

    This thread has the potential to be something really good.

    Unfortunately, during a bull run, too many investors get caught up in the growth trap brought on by TV and Wall Street. Just ask the people who think they are ever going to break even on FRPT, CROX, JSDA, and Heelys. Dividends are the only true indicator of company profits. As we saw in 2006 companies lured speculators towards their stock by 'buying back shares'. Despite the rah rah this subject gets, share buybacks do nothing for the individual investor. The only group this benefits is Wall Street as they are the only ones buying low and selling high. What's a company like CROX going to do with those shares they bought back at 60? Sell them to raise capital?

    If you were to buy dividend paying stocks and reinvest the dividends, you'd be glad to see your company drop in price. While reinvesting dividends sounds easier said than done, it is still an effective method in the long run. For example, you could automatically reinvest dividends with your broker but you may only be able to buy a few shares with each quarterly divvy payout. You could also take your dividends and reinvest them in another company you've got your eyes on. Nobody said you have to reinvest in the same company that issues them.

    Another idea would be to collect the dividends, let them sit in a cash money market account, and wait for the company share price to fall off a cliff. I know, I know, don't catch a falling knife and all but you probably don't have to worry about a wide moat company going under if you're planning 10+ years out. Do this and you're going to lower your cost average over time.

    I suspect dividend stocks don't have as much appeal amongst the individual investor as it should because of the Growth Trap implemented by TV shows and get rich quick schemes. Every time you look on TV you'll see "Our market movers are XYZ, which is up 4.2% today on an announced share buyback while ABC is down 6% after writing down $2 Billion in bad loans." The retail investor takes this as, "Time to buy XYZ and sell my ABC". Hence the term 'Dumb Money'.

    I'm not an advocate of DRIPs because of the hidden fees they impose to buy, reinvest, and liquidate. You're also stuck investing only in that company stock for the duration.

    As much as I'd like to, I can't consider GOOG or CSCO long term holdings. Just my opinion, but unless you're trading them in and out, your gains are nothing but paper gains. There were lots of paper millionaires in 2000. Ask a Gold Bug how much money he's made in gold as a long term investment too if you get a chance. Don't fall for that one either.

    It sounds simple, but a long term account could hold dividend paying stocks such as PFE, BAC, C, MO, XOM, WMT and it will be worth a lot of $$$ some day. On a side note, if you managed to pick a good dividend paying mutual fund, you'll probably get to reinvest cap gains as well. Dividends have begun to make a comeback as investors sought real earnings after the dot com debacle, but long term investors are not quite fully utilizing the power of them. Again, it's the great growth trap brought on to us by the Street. (Hey can you blame them? If there weren't retail investors, who would a Hedge Fund sell their growth stocks to at the top?) Wait a little while and build up your ammo before you decide to start shooting from the hip. Get rich slowly. It takes money to make money.

    (If only I would've reinvested those dividends in BOS when I received them quarterly. BOS was Boston Celtics, my first stock holding ever, which was bought out sometime around '01.)

    I'm wondering what you folks do. Do you reinvest via DRIP? Do you reinvest as soon as the dividend is payed out? Do you take the money as cash? Do you look for other opportunities?

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  11. #18

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    Default Re: Dividend Stocks

    My bundle of dividends are paid according to fate - they are all on auto-pilot. They make me feel better during weeks like we recently experienced knowing that I'm still buying regardless - especially during the low valleys. And dividend reinvestments become a self-feeding system - the lower the stock purchase price the greater the shares and the more dividend the next time around. I find that I do hate to sell a position because the income loss is what I miss. But a good capital gain makes the sacrifice worthwhile because that income will be redistributed to purchase other wall flowers that come with a dowry.


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  13. #19

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    Default Re: Dividend Stocks

    Quote Originally Posted by VirginiaBob View Post
    I've never bought an individual fund. I've always held mutual funds throughout my lifetime, but am thinking about taking the plunge and buying some individual stocks. Birch and others, what would you all recommend as a start? I'm not looking for high risk, but something to build some confidence in buying individual stocks.
    The best website I have ever found to get started buying on your own is The Motley Fool http://www.fool.com/index.aspx Solid advice, conservative and realistic. They cover everything from stock buying to planning retirement to car buying for the average person.

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  15. #20

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    Default Re: Dividend Stocks

    He is an interesting take on dividends. GE just increased their dividend by 11% to $0.31 per share per quarter. That works out to a 3.4% yield at the $37.00 price. Now think about a block purchase at $24.00 several years back and what the yield would be on that price with the increased dividend payout. The longer you hold the better the return looks.

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  17. #21

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    Default Re: Dividend Stocks

    Do you know the only thing that gives me pleasure? It's to see my dividends coming in.
    -John D. Rockefeller 1901

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  19. #22

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    Default Re: Dividend Stocks

    Yep, T and GE both increased their dividends and it sure brought a big smile to my face.

    CB
    “Most men and women will grow up to love their servitude and will never dream of revolution.” - Huxley’s Brave New World

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  21. #23

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    Default Re: Dividend Stocks

    Looking downtown at a nice set of nails brings a smile to my face. Boy they are pretty.

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  23. #24

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    Arrow Re: Dividend Stocks

    http://biz.yahoo.com/ap/080105/wall_main.html

    AP
    Investors May See Dividends Disappear
    Saturday January 5, 4:24 am ET
    By Stephen Bernard, AP Business Writer

    Dividends in Financial Services Sector Likely to Be Casualties of Tightening Credit Markets

    NEW YORK (AP) -- With credit markets continuing their downward spiral, investors could see their dividends disappearing in 2008.

    Dividend cuts or suspensions will continue to pick up among financial services firms in 2008, said Howard Silverblatt, a senior index analyst at Standard & Poor's. In 2007, fewer companies increased dividends, according to Standard & Poor's, while more companies in 2007 than in 2006 actually cut or suspended dividends.

    Many investors rely on dividend payments as a source of income, and financial institutions in particular have been rich sources of large payouts. Their need to raise capital in the face of rising loan defaults, though, has made their dividends one of the first places they look to save money.

    Diane Merdian at Keefe Bruyette & Woods noted that banks, in general, are offering a dividend yield that is near an all-time high when measured against the dividend yield on the S&P 500. Yields are based on a company's full year of dividends compared to the current share price.

    Higher yields indicate the company might be distributing more cash to investors than it can afford. Drastic dividends cuts or outright suspensions are likely steps if companies are struggling with earnings or other cash needs.

    Since early July, credit markets have been in a free fall, mostly due to rising defaults on mortgages, especially subprime loans given to customers with poor credit history.

    As a result of the rising defaults, investors have shied away from purchasing bonds and debt backed by the loans because of fears of mounting losses. As investors stopped buying the debt, banks and other holders of the bonds have been forced to write down their value. The writedowns -- which eclipsed $100 billion in 2007 -- have strained earnings, forcing companies to look for new ways to raise capital and preserve cash.

    More at link.
    Socrates: "Democracy, which is a charming form of government, full of variety and disorder, and dispensing a sort of equality to equals and unequaled alike."

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