What I'm thinking is that if it climbs high and you think that it might start to fall, you can sell it and get some money. Is this right? Am I missing something?
So if you sell a stock, what do you get? The closing trade amount times how many stocks you own??
2007-02-08 08:10:07 · 12 answers · asked by Katie L 3 in Business & Finance ➔ Investing
The point of stock that doesnt pay dividends is capital gains. This has become an increasingly common outcome since the Bush tax cuts which reduced the capital gains tax.
When you sell a stock, it isnt always for the "closing trade" amount, its actually for whatever meeting price your shares can fetch on the market when they are sold.
After that, yes, what you get is whatever that price is, times number of shares sold.
Capital gains, at its basic level, is the difference between the share price you bought at, and the share price you sold at. You may owe up to 15% on this gain.
2007-02-08 08:17:44 · answer #1 · answered by M O 6 · 1⤊ 0⤋
you got it. An older company that makes a lot of money might pay a regular dividend like AT&T pays $1.80 a share a year. They have been paying a dividend for as long as I've been alive and I'm 65. What makes them attractive is they try to increase their dividend every year or so. So if you pay $100 for a share in 1980 and the div was $5, then it was 5%. If the same share now pays $9 and you have the same shares, you are getting 9% percent on your money and if you sell, your stock is probally worth $175.
So you get a $75 gain plus all the dividends you received through out the years. If there were no dividends then it shoyuld be a growth company that is getting bigger and the value is going up faster than the dividend stock. You only get paid if you sell.
2007-02-08 08:24:09 · answer #2 · answered by zocko 5 · 1⤊ 0⤋
When a stock pays a dividend it has NO bearing on the value thus that 43 stock stays at 43 after paying the 1 dividend. People buy stocks that pay dividends for two reasons 1. The enroll in the DRIP program thus the dividend is used to buy partial shares. Over the years then number of stocks you hold could quadruple. or 2. The person uses the dividend as income. Stock pays 1 and you own 5000 shares thus you get 5k dividend as income. Great system for retirees
2016-05-23 22:14:51 · answer #3 · answered by Anonymous · 0⤊ 0⤋
For stocks that do not pay any dividend at all your only way of making money of the investment is an appreciation in the stock price (so YES you make money if the value of the stock goes UP and then you SELL).
So when you BUY you pay the ASK price times the number of shares and when you SELL you get the BID price (which is lower than the ASK price) times the number of shares. The difference in the BID and ASK prices the exchange keeps. You will also need to pay a broker commision on the trade (trade = a BUY and a SELL to complete the transaction)
2007-02-08 08:20:22 · answer #4 · answered by random_market_investor 2 · 1⤊ 0⤋
This topic is very large. I will respond from the aspect of tax preference. With a zero dividend stock, the investor will decide when to sell and pay the capital gain tax. With a dividend distribution stock, you have to pay the tax during the distribution period. Having said that, different investors have different preference vis-a-vis the tax implication. Some investors look for the dividend distribution as a mean to enhance their monthly income.
Hope that helped
Eboudames
2007-02-08 08:43:19 · answer #5 · answered by boudames 1 · 0⤊ 0⤋
Dividends are earnings (interest) on an investment. If the stock earns nothing it might have substantial capital gains, which is the amount of increase in value or appreciation. if you sell a stock you get the capital gains. The dividends (interest), if any, are usually posted quarterly or annually and may be left to buy additional shares.
2007-02-08 08:16:48 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Your exactly right. Most stocks are common stock and that is how you will have to make your money on them. Usually dividends are offedred to make the stock more attractive. The company offering dividends might be a little less stable, but they will be able to sell their stock because dividends are offered.
2007-02-08 08:16:21 · answer #7 · answered by Ryan T 2 · 0⤊ 0⤋
Be careful of valuing a Co. based on the payment of dividends. There are many Cos. (like Google) that instead of paying dividends, reinvest in assets that make the co. money, thus driving up the value of shares. They also tend to have more cash flow on hand which make the price of shares go up. Remember, when dividends are paid, that is less money the Co. has to operate on and make you more money.
2007-02-08 08:13:36 · answer #8 · answered by darshunk 2 · 1⤊ 1⤋
Correct.
2007-02-08 08:18:08 · answer #9 · answered by Anonymous · 0⤊ 1⤋
Yea, you have the basic idea! Minus commissions of course.
2007-02-08 08:13:02 · answer #10 · answered by Bunger 2 · 1⤊ 0⤋