TAILIEUCHUNG - Technical Analysis of the Financial Markets_5

Tham khảo tài liệu 'technical analysis of the financial markets_5', tài chính - ngân hàng, tài chính doanh nghiệp phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | 44 The Stock Market of this many professionals believe that stockholders fall into two groups in their decisions on where to invest. One group favors investment returns in the form of periodic dividend payments. Because these payments occur in a generally predictable fashion it is like receiving income from the firm. Thus stocks that favor dividends to reward shareholders generally are referred to as income stocks. Retirees counting on periodic cash flows from dividends represent investors who prefer income stocks. Utility companies such as your local electric company generally are income stocks. Also preferred stock generally is considered a good income stock since its dividends generally are high and must be paid out prior to dividends on common stock. Some investors do not need the predictable cash flows and are quite comfortable in letting the firm retain the profits to enhance future returns. Indeed some investors prefer such an investment vehicle since this minimizes their tax obligations. As long as the investor retains their shares their unrealized gains come with no tax obligation unlike dividends that require the stockholder to claim the return on their annual income tax. Stocks that do not pay dividends but reward their shareholders with gain in the form of capital appreciation generally are referred to as capital appreciation or growth stocks. Berkshire Hathaway is a classic example of a capital appreciation stock it pays no dividend and the price of each share has and is expected to increased over time. Of course some firms find it advantageous to change how they compensate investors. Microsoft is agood example. Foryears Microsoft as apublic corporation paid out no dividends at all like Berkshire Hathaway. The firm found it could put its profits to good use internally and their investors showed no evidence that dividends were important to them. However with recent tax law changes that resulted in dividends being taxed only at a 15 percent rate .

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