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Message
re: XOM dividend almost 10% now
Posted on 3/13/20 at 12:44 pm to Pintail
Posted on 3/13/20 at 12:44 pm to Pintail
quote:
So would you put your money in a savings account that only pays you interest on the initial deposit? Then leave that money in for years?
I don't know what point you're trying to make with this. Dividends are paid based on the number of shares you own, regardless of what you paid for them or what the quoted the price of the stock is. It only changes if the board decides to change the dividend.
If a stock pays $1 dividend per share, and I buy a share for $50 and you buy a share for $100, the yield on my invested $50 is 2%. The yield on your invested $100 is 1%. If the stock price goes to $1M, my yield on my invested $50 is unchanged, unless the board changes the dividend rate.
1
Posted on 3/13/20 at 12:46 pm to Desert King
quote:
You’re combining two different things. Only thing relevant to a dividend payment is the number of shares you own. The price of the stock at that moment is irrelevant. The company is distributing a portion of its earnings to shareholders, and that amount is divided by the number of slices of the pie you own. That’s it.
You are correct. But if that share is worth $8,700 making $3.40 per year would be a bad dividend investment compared to it being $37 making $3.40 per year.
Posted on 3/13/20 at 12:49 pm to Pintail
quote:Correct, that would not be a stock that people buy for its dividend. :Insert most tech stocks here:
But if that share is worth $8,700 making $3.40 per year would be a bad dividend investment compared to it being $37 making $3.40 per year.
Posted on 3/13/20 at 12:49 pm to Brummy
quote:
If a stock pays $1 dividend per share, and I buy a share for $50 and you buy a share for $100, the yield on my invested $50 is 2%. The yield on your invested $100 is 1%. If the stock price goes to $1M, my yield on my invested $50 is unchanged, unless the board changes the dividend rate.
At this point we would both have $1M invested only making $1 or 0.0001% dividends. You aren't making 2% on your investment anymore and I'm not making 1% on my investment.
Posted on 3/13/20 at 12:57 pm to bayoubengals88
quote:
Correct, that would not be a stock that people buy for its dividend. :Insert most tech stocks here:
right. Not replying to you specifically but in general..
Most of the reputational dividend stocks raise and lower their dividend as their stock price rises and falls. Therefore, if you bought stock at $30 with 30cent dividend, and five years later the stock is $90, assuming the growth was steady, the dividend is probably paying 90 cents a share. So, buying cheap can actually compound your actual div yeild over time ...
Say you bought 100 shares at 30. $3000
Then five years later, the value is $9000 and your div is 9 cents, but you only actually put in $3000 five years ago. now you are making % on the $9000, it really compounds and snowballs in a good way. Your actual div yeild at that point could be like 20% (not using exact numbers, just illustration)
But the reverse can also happen. Buy a good div stock at a high price, thinking you are at least getting 5% out of it in div, but then over the years it keeps falling, and div adjusted down, year after year after year. See Ford Motor Company
This post was edited on 3/13/20 at 12:59 pm
Posted on 3/13/20 at 12:58 pm to Pintail
quote:
t this point we would both have $1M invested only making $1 or 0.0001% dividends. You aren't making 2% on your investment anymore and I'm not making 1% on my investment.
Your “investment” is still the original amount of money you paid for the stock. The fact that the share price has doubled or tripled or quadrupled since then doesn’t mean the dividend yield is readjusted to this amount. It’s not a savings account.
Posted on 3/13/20 at 12:58 pm to Pintail
quote:
At this point we would both have $1M invested
No, we don't. I have $50 invested, with an unrealized gain of $999,950. The yield is still calculated on what I actually paid, not what I would have if I sold my stock today. You're getting capital appreciation and dividend yield mixed up.
Posted on 3/13/20 at 1:04 pm to Brummy
quote:
At this point we would both have $1M worth of a stock
Okay I corrected it. And at this point we would both be terrible with money if we were still invested in this for the dividends.
This post was edited on 3/13/20 at 1:05 pm
Posted on 3/13/20 at 1:06 pm to Pintail
quote:
we would both be terrible with money if we were still invested in this for the dividends.
No one has said the contrary.
Posted on 3/13/20 at 2:54 pm to Pintail
nm
This post was edited on 3/13/20 at 2:56 pm
Posted on 3/13/20 at 5:20 pm to Desert King
Just got into rds b at 27 dollars. That is crazy low
Posted on 3/13/20 at 5:49 pm to 632627
quote:
A 10% dividend for almost any company is abnormal and a sign that the dividend could be in trouble.
Are it could be a sign that morons have panicked the nation into acting stupider than the normal level of stupid.
Posted on 3/13/20 at 5:56 pm to omegaman66
quote:
Are it could be a sign that morons have panicked the nation into acting stupider than the normal level of stupid.
Except the o&g stocks aren’t getting hit by just the corona hysteria.
Travel stocks yielding close to 10% are in trouble also.
Posted on 3/14/20 at 2:00 am to tiger91
quote:
If the price of a stock is tanking and they still have to operate, how does the dividend go up? It just sounds counterintuitive.
Share price and operating revenue are not linked per se, or rather to say the share price has little effect on a company other than howling investors.
Posted on 3/14/20 at 8:16 am to Desert King
I would look at other companies not oil related paying high percentage dividends right now. I xom is one of the safest long term however.
Posted on 3/14/20 at 10:35 am to bayoubengals88
quote:
The dividend payments are fixed. They don't move.
But they aren't fixed. They can change at any time at the discretion of the board. If this price war keeps up, the oil companies could very well reduce them.
And in the long run, as soon as a (much) better lithium battery is developed, gasoline will become obsolete.
This post was edited on 3/14/20 at 10:37 am
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