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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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Thursday, July 10, 2008
Zacks Analyst Interview Highlights: Halliburton, Baker Hughes, Diamond Offshore, Transocean and Pride
Comtex
CHICAGO, Jul 10, 2008 (BUSINESS WIRE) ----Zacks.com releases the latest Analyst Interview. Today's interview is with senior analyst Sheraz Mian, who discusses Halliburton (NYSE: HAL), Baker Hughes (NYSE: BHI), Diamond Offshore (NYSE: DO), Transocean (NYSE: RIG) and Pride (NYSE: PDE).
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Which sub-sectors stand to benefit from the current environment, near term?
On the whole, stock prices still reflect long-term oil prices that are significantly below current levels; so they have a lot of room to catch up. Many of the major oil stocks (for example the large-cap integrateds) haven't moved up as much as crude oil has in the last 6 to 12 months. So, for investors with a relatively low-risk threshold, the large-cap integrateds may be a relatively safe and stable group to be invested in.
Another major sub-sector is oilfield services and drilling. These companies do not need oil prices to be around $130-$140 to make a lot of money; they will be doing equally good in a $90-$100 oil environment. My top picks in this group include Halliburton (NYSE: HAL), Baker Hughes (NYSE: BHI), Diamond Offshore (NYSE: DO), Transocean (NYSE: RIG) and Pride (NYSE: PDE), to name a few. While the first two are integrated service companies, the last three are offshore drillers, with rigs capable of operating in very deep waters.
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Copyright Business Wire 2008 ********************************************************************** As of Sunday, 07-06-2008 23:59, the latest Comtex SmarTrend� Alert, an automated pattern recognition system, indicated an UPTREND on 02-19-2008 for BHI @ $68.95. As of Sunday, 07-06-2008 23:59, the latest Comtex SmarTrend Alert, an automated pattern recognition system, indicated an UPTREND on 06-30-2008 for DO @ $140.47. As of Sunday, 07-06-2008 23:59, the latest Comtex SmarTrend Alert, an automated pattern recognition system, indicated an UPTREND on 03-27-2008 for HAL @ $39.44. For more information on SmarTrend, contact your market data provider or go to www.mysmartrend.com SmarTrend is a registered trademark of Comtex News Network, Inc. Copyright � 2004-2008 Comtex News Network, Inc. All rights reserved.
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