Stock and Fund Dividends

When is a dividend not a dividend?

The latest thing "conservative" brokers are preaching these days is to buy stocks that pay dividends. Everyone likes dividends. I know I do, but when Wall Street tells me something I am automatically suspicious because they lie to me every day. Is this a new scam? Let's take a look.

When you buy a bond or a CD at the bank it pays interest and is a real dividend. You might get a check every month, quarter or annually or receive a credit to your account. The amount of your principle (what you paid for it) remains the same. Yes, that is a true dividend.

Companies make big splashes about raising their dividend. It was 50 cents per share, but we have raised it to $1.00. Big deal. Yes, you will receive a check and at least you know the company has cash available to pay you. That is an indication the company is in good financial condition, but there have been many of the big names on the NYSE that have continued dividends even when they have lost money. How can that be?

Currently Microsoft has announced a dividend of $3.00 per share. The talking heads on CNBC-TV tell us they are loaded with cash and want to distribute it to their stockholders. Many people buy the stock in anticipation of the dividend as they think they will be getting an extra $3.00 per share. They are in for a big surprise.

The day that dividend is paid Microsoft stock (symbol MSFT) will automatically drop $3.00 per share. Today $27.00; tomorrow $24.00. Folks, this is NOT a dividend. This is a distribution of capital. You are being paid in your own asset. The fool that believes the Wall Street mumbo-jumbo will not have one extra penny after the dividend than he did before. In fact he will have less. Why?

The stockholder will now be allowed to pay income tax on the "dividend" distribution. To make that "dividend" seem even better the Bush administration has reduced dividend taxes from 38.6% to 15%. Thanks, Mr. Bush. Thanks for nothing. I can't blame him for more Maul Street smoke and mirrors. He has just made it cost less to get back your own money.

Companies seldom pay large dividends and they are paid quarterly. A $30 stock that pays a 4% dividend ($1.20) on a quarterly basis shows a decrease in the stock price that day of 30 cents per share and is lost in the noise of trading. Few notice that part of the price change is due to the "dividend".

When you own the stock of any company the most important criteria is to find one that is in a long term upward trend. Never buy a stock that is showing a decline no matter how "good" the company may be. Even sideways movements should be avoided. Keep in mind you are buying the stock to make money. Forget the dividends and all other "reasons" and remember if it isn't going up, don't buy it!

F*R*E*E investment letter. http://www.mutualfundmagic.com Copyright 2004 Albert W. Thomas All rights reserved. Author of "If It Doesn't Go Up, Don't Buy It!" Comments to http://www.mutualfundmagic.com Former 17-year exchange member, floor trader and brokerage company owner.

Oswego taxi to Midway ..
In The News:

Hackers and scammers keep looking for ways to break into your Facebook account. Kurt “CyberGuy" Knutsson has some tips to make sure your account is secure.
Kurt “CyberGuy" Knutsson shows you how to create group texts to reach multiple people at once — and also how to leave them if you get annoyed at the volume of interruptions.
Tax fraud is on the rise, and hackers are now using identity hijacking and artificial intelligence for tax returns in someone else's name to get a refund.
Toyota's Punyo soft robot mimics human behavior, using its chest, hips and arms — in addition to its hands — like a human to handle objects,
Hackers used third-party information to break into Roku accounts, according to the streaming company. Roku says it has secured affected accounts.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
Kurt "CyberGuy" Knutsson explains the simple steps for setting a Wi-Fi hot spot on an Android. If you have internet on your phone, it's easy.
Dubai recently hosted the first jet suit race with a backdrop of skyscrapers, and one observer says it was straight out of a comic book.
Kim Komando introduces ways to keep you and your devices safe while traveling. The clever hacks mentioned can protect you from hackers and jackers.
TikTok CEO Shou Chew published a video Wednesday urging users to "protect your constitutional rights" against a bipartisan bill that would force China to divest from the app.
Tech guru Kurt "CyberGuy" Knutsson says you can never be too careful with tech passwords. He explains how to keep your information safe.
The Lighthouse in New Zealand rotates 360 degrees, constantly giving those inside different views around the clock. Built in the 1990s, it's up for sale.
High school students in Colorado are learning how to design their own AI model projects, including cameras for self-driving cars and apps that can teach other languages.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
Vehicles collect sensitive personal information, which is used to set auto insurance rates. That's partly why auto insurance premiums are rising.
Honda's Uni-One is a hands-free electric mobility device that can reach speeds of 3.7 mph and support a user weighing up to 242 pounds.
Kim Komando puts three AI chatbots head-to-head to decide which is the best assistant for modern problems. Compare Google Gemini, ChatGPT, and Perplexity.
To safeguard personal information on iPhones, users can employ built-in security measures and iCloud Keychain for enhanced privacy. Kurt “CyberGuy" Knutsson shows you how.
Kurt “CyberGuy" Knutsson introduces you to the City Transformer’s CT-2 electric car, which can seamlessly transition from 8 feet wide on the road to a compact 3 feet for parking.
Hackers are always looking for new ways to trick targets into downloading malware. Now, they're after cryptocurrency folks via Calendly. Kurt “CyberGuy" Knutsson has the details.
Kurt “CyberGuy" Knutsson reveals how the Microlino Lite, a compact and eco-friendly vehicle, tackles city traffic congestion with its chic design and small dimensions.
A new funeral scam targets surviving family members of those who recently died. Scammers reach out to the survivors and pose as funeral home officials.
Merlin Labs' autonomous pilot could soon hit the commercial airways and may help alleviate a looming pilot shortage, according to CEO Matt George.
There's a simple way to check your subscriptions on an Android and cancel them. Tech guru Kurt "CyberGuy" Knutsson explains how it is done.
Hackers use pirated software to target macOS, Android and Windows devices in search of stealing cryptocurrency, according to Kurt "CyberGuy" Knutsson.

Invest In The Stock Market For The RIGHT Reason, Using The RIGHT Choices

Invest in the stock market for the RIGHT reason, using... Read More

Pamplona, the Wild Investment Bulls

You remember (they show it on TV every year) the... Read More

Trading For A Living - Part 1

There can't be many traders who haven't at least considered... Read More

Do You Know What is the Single MOST Critical Mistake in Trading the Stock Market??

Well maybe that's overstating it a little, but it's certainly... Read More

An Old Proverb for Investing

"If you don't know where you are going, any road... Read More

Choosing A Fund

For years I have been saying you must have a... Read More

Buying Mutual Funds

It looks like the market is ready to start up... Read More

Stock Loans

Hedge current portfolio positions and gain access to capital resources... Read More

How To Make, And Keep, Money Trading Stocks

If you are serious about making and keeping money by... Read More

Market Timing?

The recent criminal fiasco in the mutual fund industry is... Read More

Seecrets on Investment: Tired of Making Huge Losses in the Stock Market ? Part 2

Fundamental analysis.Fundamentals analysis says the best way to predict the... Read More

Stocks: Understand What You Buy!

"There is nothing more frightful than ignorance in action!" Johann... Read More

Laws and Efficiencies and Theories of Diminishing Returns

The basis of diminishing return discussions surround such simple notions;... Read More

Small-Cap Stocks: The Beginning of the Journey

When an individual investor wants to roll up his sleeves... Read More

The Golden Goose is Sick

It is finally catching up with them. The brokerage companies... Read More

Hot Stock Investing ... How to Pick Hot Stocks with Momentum Stock Trading

Profitable day traders recognize that momentum trading is among the... Read More

My Neighbor Got A New Car

I don't know what kind it is, but I saw... Read More

Successful Trading ? Taking Profits - Part 2

Suppose your position has made a big move and you... Read More

Cash

How many people went to a cash position this week?... Read More

The Secret to More Winning Trades is as Simple as Avoiding This Common Mistake

If you're a normal human being, your need to feel... Read More

Losses, not Profits, will Stop You from Trading in the Market

Should the market turn against you, it is important that... Read More

Good News?

As the man said, "I've got some good news and... Read More

Dont Buy Worldcom! A Guide to Wise Bottom Fishing

Over the past few months, several investment professionals have brought... Read More

Race Horses and Mutual Funds

For years investors have been taught to look into the... Read More

How Eating Bitumen Made Me a Better Trader

Trading is a fascinating activity.There are so many layers to... Read More

shuttle from Midway Morris ..