Stock and Fund Dividends

When is a dividend not a dividend?

The latest thing "conservative" brokers are preaching these days is to buy stocks that pay dividends. Everyone likes dividends. I know I do, but when Wall Street tells me something I am automatically suspicious because they lie to me every day. Is this a new scam? Let's take a look.

When you buy a bond or a CD at the bank it pays interest and is a real dividend. You might get a check every month, quarter or annually or receive a credit to your account. The amount of your principle (what you paid for it) remains the same. Yes, that is a true dividend.

Companies make big splashes about raising their dividend. It was 50 cents per share, but we have raised it to $1.00. Big deal. Yes, you will receive a check and at least you know the company has cash available to pay you. That is an indication the company is in good financial condition, but there have been many of the big names on the NYSE that have continued dividends even when they have lost money. How can that be?

Currently Microsoft has announced a dividend of $3.00 per share. The talking heads on CNBC-TV tell us they are loaded with cash and want to distribute it to their stockholders. Many people buy the stock in anticipation of the dividend as they think they will be getting an extra $3.00 per share. They are in for a big surprise.

The day that dividend is paid Microsoft stock (symbol MSFT) will automatically drop $3.00 per share. Today $27.00; tomorrow $24.00. Folks, this is NOT a dividend. This is a distribution of capital. You are being paid in your own asset. The fool that believes the Wall Street mumbo-jumbo will not have one extra penny after the dividend than he did before. In fact he will have less. Why?

The stockholder will now be allowed to pay income tax on the "dividend" distribution. To make that "dividend" seem even better the Bush administration has reduced dividend taxes from 38.6% to 15%. Thanks, Mr. Bush. Thanks for nothing. I can't blame him for more Maul Street smoke and mirrors. He has just made it cost less to get back your own money.

Companies seldom pay large dividends and they are paid quarterly. A $30 stock that pays a 4% dividend ($1.20) on a quarterly basis shows a decrease in the stock price that day of 30 cents per share and is lost in the noise of trading. Few notice that part of the price change is due to the "dividend".

When you own the stock of any company the most important criteria is to find one that is in a long term upward trend. Never buy a stock that is showing a decline no matter how "good" the company may be. Even sideways movements should be avoided. Keep in mind you are buying the stock to make money. Forget the dividends and all other "reasons" and remember if it isn't going up, don't buy it!

F*R*E*E investment letter. http://www.mutualfundmagic.com Copyright 2004 Albert W. Thomas All rights reserved. Author of "If It Doesn't Go Up, Don't Buy It!" Comments to http://www.mutualfundmagic.com Former 17-year exchange member, floor trader and brokerage company owner.

cleaning service near Bannockburn ..
In The News:

Learn how to act against cybercriminals in 2026 with essential security steps like two-factor authentication, software updates and credit freezing.
Choose between OpenAI releasing Sora text-to-video model, the AI race heating up, or Waymo driverless cars launching in cities across the country
Learn how to set up Google Maps and Apple Maps on your phone to automatically remember where you parked. Step-by-step instructions for enabling location services and parking detection.
Phishing scammers use rnicrosoft.com domain to impersonate Microsoft by replacing "m" with "rn" in typosquatting attacks that steal login credentials.
OpenAI announces new teen safety rules for ChatGPT users under 18, blocking romantic roleplay and requiring extra caution on body image topics.
A 2025 data breach at fintech company 700Credit exposes personal information of more than 5.8 million people through compromised third-party integration partner.
Retailers lose $76.5 billion annually to return fraud as nearly 10% of U.S. retail returns involve fraudulent activity, with $850 billion in returns expected in 2025.
ShinyHunters claims responsibility for stealing 94GB of Pornhub user data affecting over 200 million records and demands Bitcoin ransom.
ChatGPT 2025 now connects to Apple Music, Canva, Expedia, TripAdvisor and OpenTable through built-in apps that help users create playlists, design graphics and more.
Apple releases emergency patches for two zero-day vulnerabilities actively exploited in attacks. iPhone and iPad users urged to update immediately.
DoorDash launches Zesty, an AI-powered social app that recommends restaurants through conversational search, now testing in San Francisco and New York.
Cybersecurity firm Infoblox reveals that over 90 percent of parked domains now redirect visitors to scams and malware, making simple typos extremely dangerous.
The Fox News AI Newsletter covers the latest artificial intelligence technology advancements, including the challenges and opportunities AI presents now and for the future.
GPT-5.2 is now live for all ChatGPT users with improved coding, writing and image interpretation, with Kurt Knutsson offering his review.
New iPhone replacement scam uses pressure tactics and fake carrier calls to steal devices from buyers. Criminals claim shipping errors and demand urgent returns.
Amazon Ring's new facial recognition feature sparks privacy controversy as Electronic Frontier Foundation critics argue the AI upgrade expands surveillance risks.
New Android banking trojan Sturnus steals credentials, reads encrypted messages and controls devices.
Denmark's 3D-printed student village proves automation builds 36 apartments faster than traditional methods. Skovsporet project shows housing future.
Discover Android's new Sound Notifications feature that alerts you to smoke alarms, doorbells, and baby cries even when wearing headphones.
New SantaStealer malware reportedly threatens holiday shoppers with password theft. This Christmas-themed info-stealer targets browsers and crypto wallets.
The Christmas season brings a surge in Netflix phishing scams targeting shoppers with fake emails. Stacey P received convincing scam but verified account first.
San Francisco Giants invite Jamie Grohsong to throw ceremonial first pitch at Oracle Park after he learned to play baseball with a bionic hand following an injury.
FBI warns cybercriminals are stealing family photos from social media to create fake proof of life images in virtual kidnapping scams targeting victims.
Instagram's new 'Your Algorithm' tool lets you control your Reels feed in real time. The app now gives you power to customize what videos you see.
Major Marquis fintech breach exposes 400,000-plus Americans' data through unpatched SonicWall vulnerability, with Texas hardest hit at 354,000 affected.

8 Penny Stocks to Avoid

There are many good penny stock investments available, which could... Read More

The Exclusive Club of Large Caps

Picture one of those clubs where only the real heavyweights... Read More

Stock and Fund Dividends

When is a dividend not a dividend?The latest thing "conservative"... Read More

Parachute Investing

Ever jumped out of an airplane? It's OK if you... Read More

Staying Sane While Wall Street Crashes

Everybody is riding the Wall Street Roller coaster. Even if... Read More

Buy and Hold Investment Philosophy

Wall Street has been preaching the doctrine of Buy and... Read More

What is Involved in Peak Performance Trading?

There is so much involved in developing peak performance, that... Read More

Good News?

As the man said, "I've got some good news and... Read More

Price Targets

Every day in any financial publication you will find the... Read More

Frog In The Pot

You remember the story about the frog that was put... Read More

Patterns

The Law of Chaos is the theory of random unpredictable... Read More

Why Investors Use Financial Planners

Do you have a financial planner? Does one of your... Read More

Overvalued & Underbought

With all the bad news that has been dumped upon... Read More

Economists

In today's volatile and confusing stock markets everyone is searching... Read More

Low Expense Ratio

One of the big advertising kicks today from mutual funds... Read More

Who Knows?

The Shadow knows. Remember him? It seems a shadow has... Read More

Why Buy and Hold?

Since I can remember, and that's a long time ago,... Read More

Bollinger Bands Strategies

The Bollinger Band theory is designed to depict the volatility... Read More

Robert Rodriguez Weathers the Stock Market

Robert Rodriguez likes to buy stocks at their lows. When... Read More

Buying Stocks and the Importance of Correct Timing

An investor can find and research the best stock on... Read More

No Load Mutual Funds or Exchange Traded Funds (ETFs)?

If you are fed up with early redemption charges and... Read More

What is the Most Important Indicator of All?

Most stock market traders have a favorite technical indicator.The one... Read More

Pamplona, the Wild Investment Bulls

You remember (they show it on TV every year) the... Read More

Intervention

Intervention. Now don't let that big word scare you. The... Read More

Bull or Bear?

Cat or dog? Maybe Zebra. Shucks, I don't know, but... Read More

pet-friendly home cleaners Mundelein ..