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A related term you ll hear often is the dividend yield. This is a company s annual dividend amount divided by its current share price. So, if Monster Gene was priced at $20 per share, divide $1 by $20 to get 0.05, or a 5% yield.
Companies can use their earnings in other ways than by paying dividends. They may, for instance, pay down debt or buy back shares of their stock. Companies trying to grow rapidly frequently won t pay dividends, as they prefer to spend all available funds to further their growth – perhaps by hiring more people or building more factories.
Q: Is it better to sell a stock that has lost value or one that s gained value? P.T., Bellevue, Wash.