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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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Friday, June 27, 2008
Zacks Analyst Blog Highlights: Transition Therapeutics, Elan, Eli Lilly, Burger King and McDonald's.
Comtex
CHICAGO, Jun 27, 2008 (BUSINESS WIRE) ----Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Transition Therapeutics Inc. (Nasdaq: TTHI), Elan (NYSE: ELN), Eli Lilly (NYSE: LLY), Burger King (NYSE: BKC) and McDonald's (NYSE:MCD).
See the latest posts to the Analyst Blog: http://www.zacks.com/blog/post_info.html?g=6
Here are highlights from Thursday's Analyst Blog:
Transition Thera Could Take Time
Transition Therapeutics Inc.'s (Nasdaq: TTHI) lead pipeline candidates are being developed for the treatment of Alzheimer's disease and diabetes, both of which represent significant commercial opportunity. The company has agreements with strong collaborative partners for the development and commercialization of its pipeline candidates.
While we are optimistic on the company's development pipeline, both candidates are still years from commercialization. We look forward to seeing additional clinical results on these drugs before we get bullish on the name.
Transition's collaborative and licensing agreements are in line with its business model and makes strategic sense. The signing of such agreements not only validates the company's technology, but also provides it with much needed funds required to pursue late-stage clinical development. We are pleased to see that the company has partnered both its lead candidates ELND-005 with Elan (NYSE: ELN) and TT-223 with Eli Lilly (NYSE: LLY), both experts in their fields.
Roll Out Carpet for Burger King
We are initiating coverage of Burger King (NYSE: BKC) with a Buy rating. The company has resumed unit growth after four years of negative or no growth and in our opinion, is poised for high-teens CAGR (Compound Annual Growth Rate) in earnings over the next five years.
We think BKC shares offer investors an excellent opportunity to participate in the fast-growing economies of Asia and South America, where it has a very small presence relative to McDonald's (NYSE:MCD), the category leader. We expect overseas expansion to be the primary driver of unit growth for the next decade.
Burger King is currently trading at the high end of the group, in line with McDonald's on an EV/EBITDA (enterprise value/earnings before interest, taxes, depreciation and amortization) basis but at a premium on a multiple of 2008 earnings per share. However, on a multiple of its growth rate, BKC shares are inexpensive relative to the group.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
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About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
SOURCE: Zacks.com
Zacks.com Mark Vickery Web Content Editor 312-265-9380 Visit: www.zacks.com
Copyright Business Wire 2008 ********************************************************************** As of Monday, 06-23-2008 23:59, the latest Comtex SmarTrend� Alert, an automated pattern recognition system, indicated an UPTREND on 01-24-2008 for BKC @ $24.35. As of Monday, 06-23-2008 23:59, the latest Comtex SmarTrend Alert, an automated pattern recognition system, indicated an UPTREND on 06-18-2008 for ELN @ $28.79. As of Monday, 06-23-2008 23:59, the latest Comtex SmarTrend Alert, an automated pattern recognition system, indicated a DOWNTREND on 04-22-2008 for LLY @ $48.84. 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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