Stock Dividends And Their Benefits

When any company makes a profit, the directors may divide the profit among the stockholders as ‘dividends’ or they may decide to use it to expand the business. Dividends may be paid only out of the company’s profits only. When profits are used to expand the business, the directors and stockholders may decide to issue more stock to show that there is more money invested in the business. The new stock will be divided among the stockholders as a ‘stock dividend’. Hence, stock dividend could be conveniently defined as the distribution of extra shares among the stockholders or investors of the company.

Many companies and financial institutions offer shares to the investors in order to generate money for the organization. The investors also put money in the organization through these shares. Such an investment is greatly dependent on the reputation and performance of the organization. Hoping to get good returns in the form of cash dividends or stock dividends is the main reason behind making these investments. There are many advantages of stock dividend. Firstly, no tax is levied on such dividends, much to the relief of the stockholder.

In case a stockholder earns some stock dividends from the company he invested in, he or she is not expected to pay any type of tax on that until he or she decides to sell the additional shares. Secondly, the stock dividends earned by the stockholder enables him or her with additional ownership in the organization, which in turn may prove profitable to the stockholder in the future. The stock dividends are given to a particular stockholder depending on the number of shares he or she holds. How lucrative a certain stock dividend is going to be; again depends on the performance of the organization in the market.

I might add here that I am the stockholder in a few companies of good standing in the commercial market. I have always been a little skeptical before investing in any stock or shares. Somehow, going by the sea changes that have been happening in the economic scenario, I have always opted for cash dividend instead of stock dividend. Cash dividend is one way of ensuring that you have ready cash on your hand at the end of the year based on the company’s earnings. This money can be utilized for reinvesting, if need be. What if you opt for stock dividend, and suddenly the company does not perform well and reports sick, all your shares will nothing but worthless pieces of paper. You will have to again wait with bated breath and hope that the company is revived with a rehabilitation package in place.

Share and Enjoy:

Tags: cash dividends, dividends, financial institutions, Investments, investor, investors, money, profit, profits, stock, stock dividend, stock dividends, stockholder, stockholders, tax

Posted in Getting Started In The Stock Market, Investments | Leave A Comment »

Dividend Re-Investment Program

A DRIP, or Dividend ReInvestment Program, is a method of investing that makes it easy to build an investment in a single companies stock, over a period of time. These programs work by allowing investors to buy a set price worth of shares on a recurring basis. Entry costs are generally low, and additional benefits come from the fact that investors buy from the company directly and so avoid brokers fees. The key feature of a DRIP is that dividends paid are reinvested in the company, with additional shares being automatically bought on the investors behalf.

Drip investment programs at their heart seem relatively simple, and are often offered to employees of the company in question. Outside of the company, DRIPs are popular among beginning investors who see the low entry cost and the ability to get more shares over time without having to decide when to buy. Despite the fact that DRIPs are attractive to these investors, they should not be overlooked as a strong part of a diverse portfolio for a more experienced investor.

One often overlooked fact is that you can participate in a DRIP with as little as one share, in some cases. This, coupled with the lack of brokers fees, means that it is possible to snap up low numbers of speculative shares in a range of companies that a seasoned investor feels might have potential to undergo rapid growth. In fact, shares can be bought in any company in which an investor wishes to take a long term position using that companies DRIP rather than going through a broker – although every DRIP has varying conditions and not all are fee-free. The best place to find this information is on the web site of the company you are considering.

Another point worth remembering is that dividends paid on shares held as a DRIP do not have to be reinvested! Subject to the company, investors can choose to reinvest part or none of a dividend, and have the rest paid out as usual, making the DRIP perform exactly like a conventional investment (and possibly minimizing tax complications). So regardless of your level of investment experience – DRIPs can be a valuable (yet cheap) way to build your portfolio!

Share and Enjoy:

Tags: dividend reinvestment program, dividends, investment programs, investor, stock

Posted in Getting Started In The Stock Market, Investments | Leave A Comment »

Contest: Win “12 Steps To A Worry Free Retirement”

We’re having our very first (but not our last) contest here at Beating The Stock Market!

The contest starts right NOW and ends on Sunday, September 30 at 12:00 noon EST.

First, the prize….one winner will receive a copy of Kiplinger’s: 12 Steps To A Worry Free Retirement.

Actual customer review:
“This book lays out what you need to know about planning your retirement using easy to understand text and charts.”

Here’s how to enter:
All you need to do to enter is post about the contest and link to this post. Leave the link to where you posted about it in a comment here so we can keep track of the entries.

Good luck!

Share and Enjoy:

Tags: beating the stock market, kiplinger, Stock Market

Posted in Getting Started In The Stock Market, Investing Books, Investments | 3 Comments »

Are You Ready To Take Adventage Of The Markets

Typically the months of August and September are the two least to make gains. As people are going on their last minute vacation before the summer is over, the stock markets seem to take a break. The volume is lower than any other time of the year.

As you can see by the last couple of weeks, the markets have seen a stall in gains compared to the other four months. The overall markets are holding to their levels, but quite few good stocks have come down from where they were just a little while ago. I don’t expect them to stay there very long. At the present time, the markets are showing that they are at a good resistance level. I also see that it’s more of a bull than a bear scenario going on.

The correction in the markets seem to be happening on the individual stock levels, so I’m getting ready to go all-in. I see some of the companies that I’ve been recently coming down to levels I consider a good entry point. If the stocks do fall back after I start building a position, that won’t be a problem since I always buy in increments.

So my question to you is… Are you ready to get in (if you’re sitting on the sidelines), or build a bigger position in the companies that you own already? Do your research on those companies now, so when the time is right to get in, you will know which ones will be a great investment. If you are up more than 20% in a stock already, you might want to take profit now and get back in after the pull-back.

If you’re looking for some free advice or trading programs to help improve your trading, please check out the free trial of Jim Cramer’s Action Alert and/or Trading Solutions free trading program.
Due diligence and research is vital to surviving in the markets, so be disciplined in your trading style and remember… Happy Trading.

Share and Enjoy:

Tags: Getting Started In The Stock Market, Investments, Stock market for beginners, Stock trading, trading software, TradingSolutions

Posted in Getting Started In The Stock Market, Investments | Leave A Comment »

Stock Market Game

I’ve said it many times, and I stand by it; Stock Trading Is Not A Game. It doesn’t matter if you’re a trader or an investor, you must do your homework by researching every stock you plan to invest in or trade But what if you could play a game and practice investing without risk? You could have fun “playing”, while learning and understanding the stock market even more.
.
I stumbled upon a free website where you can trade stocks on a virtual Wall Street. UpDown.com is a free fantasy investing site. People join UpDown to practice investing and can earn money for winning contests. Start with a $1,000,000 cash reserve and start trading stocks immediately after registering and creating a profile. With up-to-date news information along with an active forum for members to share ideas and investment strategies.
.
The UpDown is a community for people interested in investing in the stock market. If you’re new to the stock market or have a few year under your belt, this site will give you the chance to try different strategies without any actual loss of money.
.
UpDown.com provides a platform where investors can view, share, and rate high-quality stock analysis and investment ideas. They then filter, aggregate, rank, and present the community’s investment recommendations for the benefit of all UpDown members looking for valuable investment advice.
.
Click the banner below, or the one in our sidebar to join. I just joined myself and it looks like a good place for me to test out new strategies that I normally wouldn’t, with my own money.