The Uglycow Finance » dividend

The use of the asset’s cash balance

admin — Sun, 26 Dec 2010 00:42:15 +0000

Likewise, it is important to observe how you use that money in the future and if this is done to add value for shareholders. This is one of the main functions of good management of companies and a scale under which we should measure the managers of our businesses.

There are five options available for any director:

* Extending its own operations
* Buy businesses
* Investing in companies through market
* Repurchase shares
* Pay dividends.

The mission of management to determine how it will be the evolution of the company, which will be its expansion needs in the future and design a strategy that bring the maximum value to shareholders (who are ultimately the owners).

If the company has a profitable business model with clear competitive advantages and opportunities for organic growth, the best thing to do is expand their own operations. This eventually can create great value for shareholders, and is the strategy they have taken the majority of companies known as “growth” (growth companies).

Growth based on buying other companies is generally not optimal because in spite of the synergies that are achieved, often lead to many problems and merger costs, etc. However, in some cases, prices paid and if appropriate, transactions can be very beneficial to shareholders.

Investing in companies through the market can be interesting, especially as a way to indirectly invest in other companies. However, for me has always been much more sense for the company to invest in itself (if it really has potential.)

The share buyback logically creates shareholder value because it produces the opposite effect of a capital increase. The value is concentrated rather than diluted.

Finally, if a company is not able to generate shareholder value in their own business, you should return capital to shareholders. This is done by paying dividend.

All forms we have seen here have advantages and disadvantages. The best thing is to have a coherent strategy and in line with the business model of the company and the estimates of the future.

The Benefits when Buy Stock

admin — Mon, 25 Jan 2010 08:19:46 +0000

What benefits will you gain by buying stock or ownership of a company?

1. The first, if the company had a profit, then usually you get a stock of profits called dividends. Take for example, if the per stock dividend you receive $ 100 per stock, and then by 3000 the stock you have, the total dividends you get is $ 300,000. Of course, the standard amount of dividends varies from one company to another company. But the principle is more or less the same. The more stock you have, the greater the dividend you can if that company profits.

2. The second advantage could be the value of your stock rises. Back we let you buy stock at $ 1,000. Well, if then more and more who want to buy stock, then stock prices may have increased so tell $ 1,400 per stock. Thus, if you sell it, this means you get a profit of 40 percent. Profit is called capital gains. Where do you sell stock? Not to the companies that issue stock in question, but to others who do want to have these stock.

Of course, investing in stocks is risky. Namely, the decline in stock prices that you have. For example, from $ 1000 fell to $ 600 per stock. When you sell, then you will lose $ 400 per stock. Such losses usually called capital loss. Where do you sell? Also to others who do want to have these stock.

Buy Stocks

admin — Thu, 17 Dec 2009 17:29:01 +0000

What benefits will you gain by buying shares or ownership of a company?

The first, if the company had a profit, then usually you get a share of profits called dividends. Take for example, if the per share dividend you receive USD 100 per share, and then by 3000 the stock you have, the total dividends you get is USD 300,000. Of course, the standard amount of dividends varies from one company to another company. But the principle is more or less the same. The more shares you have, the greater the dividend you can if that company profits.

The second advantage could be the value of your stock rises. Back we let you buy shares at USD 1,000. Well, if then more and more who want to buy stock, then stock prices may have increased so tell USD 1,400 per share. Thus, if you sell it, this means you get a profit of 40 percent. Profit is called capital gains. Where do you sell stock? Not to the companies that issue stock in question, but to others who do want to have these shares.

Of course, investing in stocks is risky. Namely, the decline in stock prices that you have. For example, from USD 1000 fell to USD 600 per share. When you sell, then you will lose USD 400 per share. Such losses usually called capital loss. Where do you sell? Also to others who do want to have these shares.