Earnings Stocks
Comprehension and invest in stocks
A value of principal Penny break for some time, many are ruined by buying bargains. Poor Richard
A corporation is an artificial entity created by law, and endowed with certain rights and privileges, including which include the right to issue shares of the property called "action common. The authorized capital stated in the letter Company, and the amount to be issued and outstanding determined by the Council. These shares represent ownership in total assets and are originally issued to persons who have contributed their services and / or funds as co-owners.
However, these owners may have thought it desirable sell all or only part of their property to others, which, in turn, will take over as owners, the transfer is done easily in books of the corporation. These are called the common parts or capital, the first term is the more general use, and ownership is divided into a series of units called actions.
Results and dividends
Since the member is part owner of the company, which is naturally a great interest in the company's ability to earn money on the capital invested, therefore, earnings per share are important. Some companies issue quarterly or semiannual file state of affairs in order to keep shareholders informed, others not so much that the shareholder may have to wait until the annual report is received or read the latest reports of the Committee Securities and Exchange as they appear in one of the services of several investment advice.
The main reason why a strong interest in the results and dividends per share as declared by the Board of Directors, will depend on the profits, if the result is very poor, it is possible that not all dividends, should be modest result, the dividend can be low if the result is good, then the more generous dividends.
We hasten to add, however, that the total income not paid dividends, because the company must meet its current financial needs and also for a certain amount of compensation should be provided in the company so you can continue to grow. Consequently, the percentage of payments ", as they may be called, varies widely from company to company.
In some cases, payment can be extremely generous, ranging from 50-70 percent gains in other cases it may be extremely conservative, being in the 20-40 per cent, this last statement is especially true when it is necessary to maintain capital funds which can not be used immediately and urgently.
In the case of the "growth" actions, it is possible that not all dividends, or at most that can be very low, as a company may require all profits are reinvested for further growth and develop.
Perhaps the most common mistake that many owners of common stock is falling in relation to dividends. If the economy is good, then a company can benefit data of success, and its dividends are stable and even increase, businesses should adopt a time the general conditions worse, it may be that earnings will be much lower and the dividend rate may be reduced or suspended for a period of time.
May be noted here there are some exceptions, the above statements, because some key sectors (public services are a good example) believes that these changes in economic conditions and much less than others because they represent what might be called basic or "defensive" stock ownership, dividends may continue without interruption even if a price change is sometimes justified. There are many utilities that have made steady dividends over half a century, which is a strong recommendation for them to investors of modest means.
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