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You know that buying a stock makes you part owner of a company, theoretically with millions of other people. But, while ownership has its privileges (at minimum you get a neat stock certificate and an invitation to the annual meeting), being an owner doesn't necessarily pay. Sure, you make money if the stock goes up, but only if you sell, and you can, in theory, lose all the value of your investment if the stock tanks.
Enter the dividend. Here, you get money simply from holding the stock. Companies pay a yield, which is expressed in a percentage based on the stock's price. For example, if a stock trades at $10, and pays a 10% annual yield, your dividend payment would be a $1. (Usually, companies break out the payments quarterly, so, using our example, you¿d get, well, a quarter each quarter.)
Companies that pay dividends fall into a few categories. First, you've got your big, stable companies that generate enough cash that it makes sense to throw some back to shareholders. Next, there are businesses, like real estate investment trusts, that are in the business of sitting back and receiving cash, then distributing it to holders. And, then there are companies that need to dangle a high dividend yield like a carrot to ease investor fears. Cigarette-maker Altria has been doing this for years.
Simply because a company pays a dividend doesn't make it a good investment. After all, you may want to take a chance on a growth stock that can move higher in price than dividend payers are known to do. But, you can¿t beat the safety of knowing that, even if a stock doesn't move in a year, you¿re at least making something off your investment.
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Sunday, July 13, 2008
InBev Buys Anheuser-Busch for $49.91B
FOXBusiness
The King of Beers has been checkmated by a foreign rival.
The board of Anheuser-Busch (BUD) on Sunday agreed to sell itself to Belgian-beer giant InBev NV for $70 a share, for a total value of $49.91 billion. The combined company will be named Anheuser-Busch InBev and Anheuser will get two seats on the board.
It marks a dramatic shift for the Bud board and its managing Busch family, which, despite some support for the bid from some members, initially fought the idea of a takeover by InBev, which makes Stella Artois, among other popular brands.
But, despite spending weeks fighting the offer - and even initiating legal action to thwart a hostile bid - the Anheuser-Busch board ultimately headed to the bargaining table last week once InBev agreed to raise the price to $70 from $65.
The combined companies are now the world’s largest brewer with more than $35 billion in sales across 300 brands worldwide. SABMiller is currently the largest beer maker in the world.
The deal now is likely to face some political backlash. Local officials in Anheuser-Busch’s home city of St. Louis, Mo., have been fearful that InBev’s deal will cut jobs, and members of Congress have also expressed concern about such a large foreign company owning such a well-known American brand.
But Anheuser-Busch shareholders aren’t expected to have such qualms. Some publicly raised questions about why the company was so against a deal and balked when Anheuser-Busch’s board floated the idea of a takeover of its 50% stake in Mexican brewer Grupo Modelo as a way to fend off the Belgian suitor.
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