Smilodonfatalis
Active Member
- May 5, 2013
- 745
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I like to buy stocks that pay good dividends. One never knows for sure if a stock is going to go up or down, but if it pays good dividends, I at least get the feeling I'll eventually break even. (Of course, that's not always the case. I had GM and hung on to it til bankruptcy.)
I always look at how much a stock pays per share, so I know how big a dividend to expect.
I was looking at BB&Tpe preferred stock and saw that it payed a 6% yield. I looked at the past history and saw that it usually hung around $26 a share, but here lately it had fallen to $23. They're going to redeem it in 4 years at a call price of $25.
I figured, great--it pays a good yield and the chances are good it will one day again be $25 or higher and I could get some decent capital gains before they call it.
But I saw it was only paying 11 cents a share. I did the math and figured out the yield was only 2%. So I called my broker and asked about the discrepency?
The yield they show with the stock includes how much it has payed in dividends over a whole year. BB&Tpe cut their dividends by 66% the most recent quarter, and I'm sure they didn't advertise this to their shareholders. That explains why the stock dropped.
I didn't know yield was calculated by the previous year rather than the current rate. It's not such a good buy after all.
And if BB&T can't keep up their dividend payments on their preferred stock, I certainly wouldn't buy their common stock either.
I always look at how much a stock pays per share, so I know how big a dividend to expect.
I was looking at BB&Tpe preferred stock and saw that it payed a 6% yield. I looked at the past history and saw that it usually hung around $26 a share, but here lately it had fallen to $23. They're going to redeem it in 4 years at a call price of $25.
I figured, great--it pays a good yield and the chances are good it will one day again be $25 or higher and I could get some decent capital gains before they call it.
But I saw it was only paying 11 cents a share. I did the math and figured out the yield was only 2%. So I called my broker and asked about the discrepency?
The yield they show with the stock includes how much it has payed in dividends over a whole year. BB&Tpe cut their dividends by 66% the most recent quarter, and I'm sure they didn't advertise this to their shareholders. That explains why the stock dropped.
I didn't know yield was calculated by the previous year rather than the current rate. It's not such a good buy after all.
And if BB&T can't keep up their dividend payments on their preferred stock, I certainly wouldn't buy their common stock either.