Investing 102

[AMSOILGUY]

Originally Posted by AMSOILGUY

Can someone explain to me looking at these 3 stocks why one would be a better choice over the other? I enjoy all 3 companies drinks and wouldn't have a problem owning any of them. KO, PEP, DPS.

KO=Div/yield .31/2.95 and cost 41.40

DPS=Div/yield .41/2.38 and cost 68.94

PEP=Div/yield .65/2.74 and cost 95.65



All 3 looking at the 5yr start lower on the left and get higher on the right. Are you better off purchasing more of one stock and earning multiple Div or purchasing less stock and earning a higher Div? I'm sure the name of the game is to try and figure out which one is going to do better long term and thats what you should base you choice off of. But lets just say for discussion sake that they are going to continue to perform equally.



Or am I trying to make it to simple?

So using the Oct 30th cost and the equation given with the Oct 31st close date I get the decimal given. So what does that number mean to me. I'm thinking you multiple that number by the cost of the stock to get a $ amount you earned?

What is the time frame you should use?

Sorry guys this is the first I have really ever paid any attention to this stuff. I will say that I had my son figure out the decimal listed so he is learning also. I wish somebody would have taken the time to try and teach me this at 11.

Also, what is the Div/Yield? Is it Daily/ What time frame?

KO=Div/yield .31/2.95 and cost 41.40
Oct 31st Cost 41.88 =.018863419
DPS=Div/yield .41/2.38 and cost 68.94
Oct 31st Cost 69.25 = .010493864
PEP=Div/yield .65/2.74 and cost 95.65
Oct 31st 96.17=.012232096

[GregWeld]

First off -- understand that the dividend is paid as a DOLLAR amount... but the PERCENTAGE of dividend YOU receive is based on your cost. The Dividend is paid as a set amount... your stock cost is fixed... as the Dividend payout grows -- you're getting a higher and higher percentage on your cost basis.

DIVIDENDS are paid every QUARTER. You'll therefore get 4 payouts per year.

Don't forget to multiply the quarterly dividend by FOUR to get the annual dividend payout.


KO - pays .31 per quarter (X's 4 = 1.24 per year) - based on Fridays close that is 2.91%

Mathematically expressed as --- Dividend (annual) divided by the cost basis = a decimal answer. In this case 1.24 / 41.88 = .029608

Move the decimal 2 places.... 2.96%


Your cost of 41.40 makes the dividend 2.995%


You're calculation ANNUAL percentage dividend yield.


Total RETURN --- is the stock price appreciation (if any) with dividends reinvested - over a period of time. Total return - imho - is the most critical thing you can go for with your investments. It's the real return on the money you've invested. If you were lucky enough to see 100% total return in 3 years and then manage to keep that percentage of return going for every three year period --- you can only imagine the growth of your money. Good luck with the kind of return... LOL But it does happen!!!

Originally Posted by AMSOILGUY

So using the Oct 30th cost and the equation given with the Oct 31st close date I get the decimal given. So what does that number mean to me. I'm thinking you multiple that number by the cost of the stock to get a $ amount you earned?

What is the time frame you should use?

Sorry guys this is the first I have really ever paid any attention to this stuff. I will say that I had my son figure out the decimal listed so he is learning also. I wish somebody would have taken the time to try and teach me this at 11.

Also, what is the Div/Yield? Is it Daily/ What time frame?

KO=Div/yield .31/2.95 and cost 41.40
Oct 31st Cost 41.88 =.018863419
DPS=Div/yield .41/2.38 and cost 68.94
Oct 31st Cost 69.25 = .010493864
PEP=Div/yield .65/2.74 and cost 95.65
Oct 31st 96.17=.012232096

[68Cuda]

Originally Posted by GregWeld

Total RETURN --- is the stock price appreciation (if any) with dividends reinvested - over a period of time. Total return - imho - is the most critical thing you can go for with your investments. It's the real return on the money you've invested. If you were lucky enough to see 100% total return in 3 years and then manage to keep that percentage of return going for every three year period --- you can only imagine the growth of your money. Good luck with the kind of return... LOL But it does happen!!!

Yep, either have to find something in the right stage of development or a real bargain. For example, I am planning on off-loading INTC tomorrow, it no longer meets my requirements of a bargain stock. I bought 230 shares @21.47 in Nov 2012, and another 220 shares @ 20.97 in April 2013. So my total cost was $9560 and change. Between reinvesting dividends and the current price above $34 I will sell for more than $16,600. When I bought the stock the dividend was close to 4%. Now it pays 2.6% and no longer fits the profile of the stocks I want. The way I look at it is that it was a bargain @ $21 and a good company, and it was undervalued based on the high dividend. Now that the ratio of dividend to price has dropped it is now closer to the correct value. Time for me to sell and find another stock that has an artificially depressed value.

Now do not get me wrong, Intel is a great company, and I will keep an eye on them in the future.

[GregWeld]

Michael ---

Those are good thoughts and good points.... except that I'd have to correct the misinformation that the stock now pays a smaller percentage dividend. YES --- Based on todays price the dividend is a smaller percentage of yield....


BUT ---- Always the big butt....


The percentage of dividend you have been collecting has been on YOUR lower cost - so you were still collecting a 4% dividend on your cost basis! The dividend didn't go DOWN... the share price simply has appreciated.

And --- if these are taxable accounts - you've now created a taxable event by selling. Long term capital gains with a low percentage of tax for sure... but taxed non-the-less!

NOW don't get me wrong --- there's nothing with taking a nice capital gain and feeling that you can do better somewhere else. Nothing wrong with that at all. I just didn't want to CONFUSE THE NEWBS by saying the percentage was no longer in your favor. It was still paying YOU a decent percentage dividend on your cost.


I like your thinking though!! I might have sold HALF the shares -- choosing the best tax lot... and let the other ride. But that's just me. The TOTAL RETURN on INTEL (INTC) hasn't been all that "hot" at 55% for 3 years -- 110% for 5 years...



HEY ----- MAKE SURE YOU DON'T SELL THEM JUST AS THEY'RE GOING EX!!!!

[68Cuda]

Originally Posted by GregWeld

The percentage of dividend you have been collecting has been on YOUR lower cost - so you were still collecting a 4% dividend on your cost basis! The dividend didn't go DOWN... the share price simply has appreciated.

Yes - I understand the math, cost basis and all. But now that the stock price has appreciated I can take the profit and buy something that pays 3.5% to 4% on the current dollar amount. Still INTC is a good company, hard to make that jump, maybe I will do the 1/2 thing you were suggesting.

Originally Posted by GregWeld

And --- if these are taxable accounts - you've now created a taxable event by selling. Long term capital gains with a low percentage of tax for sure... but taxed non-the-less!

NOW don't get me wrong --- there's nothing with taking a nice capital gain and feeling that you can do better somewhere else. Nothing wrong with that at all. I just didn't want to CONFUSE THE NEWBS by saying the percentage was no longer in your favor. It was still paying YOU a decent percentage dividend on your cost.

Good points - this is inside a 401k, so no taxes. I did run into something annoying in that respect recently. I was taxed on a dividend inside my 401k on a foreign owned company. That is dirty pool!

Originally Posted by GregWeld

HEY ----- MAKE SURE YOU DON'T SELL THEM JUST AS THEY'RE GOING EX!!!!

Wow - thanks for the reminder, guess I will wait until the 6th! (Maybe 7th to be safe)

[AMSOILGUY]

HEY ----- MAKE SURE YOU DON'T SELL THEM JUST AS THEY'RE GOING EX!!!![/QUOTE]


What is the EX you speak of?

[68Cuda]

Originally Posted by AMSOILGUY

HEY ----- MAKE SURE YOU DON'T SELL THEM JUST AS THEY'RE GOING EX!!!!

What is the EX you speak of?

Ex-Dividend date.

Declare date: 9/12/2014 - this is the date Intel "declared" they were paying a $0.225 per share dividend on 12/1/2014.

Ex-dividend date: 11/5/2014 - If you own the stock before this date you receive the dividend, if you acquire it this day or after you do not. If I sell you my stock on or after 11/5/2014 you buy it "Ex-dividend", without the dividend.

Record date: date the company records the owners for the purpose of the dividend. A few business days after the Ex date.

Pay date: when the dividend pays out.

So, since I will own this stock tomorrow, I will get the dividend on 12/1 even if I sell it before 12/1.

[AMSOILGUY]

Originally Posted by 68Cuda

Ex-Dividend date.

Declare date: 9/12/2014 - this is the date Intel "declared" they were paying a $0.225 per share dividend on 12/1/2014.

Ex-dividend date: 11/5/2014 - If you own the stock before this date you receive the dividend, if you acquire it this day or after you do not. If I sell you my stock on or after 11/5/2014 you buy it "Ex-dividend", without the dividend.

Record date: date the company records the owners for the purpose of the dividend. A few business days after the Ex date.

Pay date: when the dividend pays out.

So, since I will own this stock tomorrow, I will get the dividend on 12/1 even if I sell it before 12/1.

Once a stock goes EX-Dividend does that mean it will never pay a dividend again as long as it is traded? Can the company later on down the road say we are going to pay a dividend again on a later date?