About Murray Cass Expertise I am eager to help investors find their way through the muddle of tech investing. I can answer questions concerning tech investing, financial reports, stocks, and options. Having worked in the computer industry for over 20 years I have a good general knowledge of computer technology. I have read over 100 investment books -- mostly the old ones. I spend my time doing investment research, attending annual shareholder meetings, and managing portfolios.
Experience Professional Engineer, MBA, over 20 years experience in computer industry, 9 years intensive investing experience.
Question Hi, I'm not sure if this a question for you, for thought I'd ask anyway:
I own some Ebay stocks, and have just learned that they don't offer cash dividends (found in their website). I am a newbie with this sort of thing and don't really check on my brokerage account until one day I checked and noticed that I haven't seen a dime added to my account in my Ebay stocks for the 2 yrs. I've had it (my div. are automatically reinvested) while my other stocks that have not rose as significantly as Ebay's, have regularly "produced" earnings/div. for me.
What I would like to know is, (and since it's not found at Ebay website or they don't reply to my emails) what exactly does an Ebay stockholder GET if not a cash dividend once they're cashed out?
Thank you in advance, I apologize if this was rather legnthy.
Answer Hi Jay,
When you buy stock you can get dividends or not get dividends. It all depends on what you are buying. Preferred stocks produce dividends. They are only available for certain companies. Common stocks sometimes produce dividends but often do not. Tech common stocks rarely produce dividends. Most dividends are cash dividends whereby you will get so many cents per share on a quarterly basis. There is also something called a stock dividend. You've probably heard of stock splits; those are stock dividends. They are meaningless. Often stocks go up when a stock dividend is announced but there is no logic behind that move. Stock dividends are not regular like cash dividends.
The ebay stock you own is common stock that does not pay a dividend. As a shareholder the only way you can get a return on your investment is by selling the stock at a higher price than you bought it for. That is called a capital gain.
With investments there are really only 3 ways to make money: capital gains (selling for more than you bought it at); dividend income (from shares); and interest income (from bonds or other debt).
Techs rationalize not having dividends by saying that they need the cash to reinvest in their businesses and shareholders will gain by owning part of a more profitable business. This, management hope, will be reflected in a higher stock price - often wishful thinking.
