- Premium vs. Discount Bonds: Which Should You Buy?
Bonds can help to balance out risk in a portfolio while also generating income in the form of interest from regular coupon payments. When a bond is issued it’s assigned a fixed par value and a set maturity date. A… read more…
- Ex-Dividend Date vs. Record Date: Key Differences
Investors who rely on dividend income must understand four critical dates to effectively manage and plan their investments. These dates include the declaration date, the ex-dividend date, the record date and the payment date. While the declaration and payment dates are generally straightforward, the ex-dividend and record dates often create confusion among investors. The nuances… read more…
- What Is a Good Dividend Yield?
Dividends are regular cash payments corporations make to shareholders to incentivize investment. The dividend yield is a percentage figure calculated by dividing the total annual dividend payments per share by the stock’s current share price. From 2% to 6% is considered a good dividend yield, but several factors can influence whether a higher or lower… read more…
- Stock Buybacks vs. Dividends: Key Differences
Stock investing can offer numerous rewards, including the potential to benefit from dividend payouts or buybacks. Both can increase investor returns but there are some significant differences in the tax treatment of stock buybacks vs. dividends. Whether it makes sense… read more…
- When Should You Reinvest Your Dividends?
Investing in dividend-paying stocks or ETFs offers the opportunity to generate passive income. If you don’t need this income immediately, reinvesting dividends — using them to purchase additional shares of the same stock or ETF — can be a powerful strategy for compounding growth. Over time, this approach leverages the effects of compounding by increasing… read more…
- How and When Dividends Are Paid
Dividends can provide extra income or help grow your investment if you reinvest them in more shares. Many investors wonder how often dividends are paid, and it’s important to understand the process. Typically, companies pay dividends every quarter, but some may distribute them monthly or annually. To know when you’ll receive dividends and whether you’re… read more…
- Understanding the Dividend Discount Model
Stock pricing may play a part in determining which companies to add to your investment portfolio. And the dividend discount model (DDM) is a commonly used method for measuring valuations. This model bases value calculations on present and future dividend payouts rather than current market conditions. If you’re a value investor, you can use the… read more…
- How to Calculate Your Dividend Payout Ratio
The dividend payout ratio can be a helpful metric for comparing dividend stocks. This ratio represents the amount of net income that a company pays out to shareholders in the form of dividends. The dividend payout ratio, or DPR, doesn’t necessarily tell you how financially healthy a company is, but it can tell you how… read more…
- How and When Do ETFs Pay Dividends?
Exchange-traded funds (ETFs) generally offer two strategies for investing. One approach emphasizes traditional capital gains growth. So as products listed on an exchange, ETFs are highly liquid assets, meaning you can buy and sell them like ordinary stocks and collect the difference when their value grows. The other strategy emphasizes income investing, as an ETF would… read more…
- Understanding Dividend Record Dates
The dividend record date establishes when shareholders are eligible to receive dividend payments. Anyone who owns shares before the record date will collect the dividend, while anyone who owns shares afterward will not. In order to qualify for a dividend payment you must have completed your purchase of the company’s shares at least two business… read more…
- Investment Income: Everything You Need to Know
Investment income is an umbrella term that includes just about any money you make from buying, holding and selling assets. However, there are three main forms of investment income, which we discuss below. Together these types of investment income are… read more…
- A Guide to Fixed-Income Investing
Fixed-income investments can provide a steady stream of income through dividends or interest payments. In the investing landscape, fixed-income is generally considered a less risky asset class since there’s some predictability about what you can earn. You may use fixed-income… read more…
- How Does Securitization Work?
You have probably heard of securitization. It’s a way of turning non-financial assets into liquid securities that investors can buy and sell. Despite its role in the market crash of 2008 and subsequent Great Recession, the process of securitization is not… read more…
- What Is a Debenture, and How Does It Work?
Bonds can be useful for adding a conservative component to an investment portfolio to balance out stocks or other high-risk securities. Debentures are a specific type of bond that government entities or corporations can use to raise capital. While all… read more…
- What Happens to an Annuity When You Die?
Planning for the future involves understanding what happens to your financial assets after you’re gone. Annuities, which provide regular income payments during retirement, are a common investment vehicle, but what happens to an annuity when you die? The answer depends largely on the type of annuity you own and the specific provisions outlined in your… read more…
- What are High-Yield Municipal Bonds?
Municipal bonds, often referred to as “munis,” are a cornerstone of income-focused investment portfolios. Issued by state and local governments to fund public projects like schools, highways, and utilities, these bonds offer investors a steady stream of interest payments, typically with the added benefit of tax advantages. For investors seeking higher returns, high-yield municipal bonds… read more…
- How to Invest in High-Yield Bonds
High-yield bonds, also known as junk bonds, are corporate or government debt securities that analysts believe are likely to default. Junk bonds are suitable for investors comfortable with high risk. For retail investors, these securities can play an important role in… read more…
- Ways to Sell Your Annuity for Cash
An annuity is an insurance contract you can use to create an income stream. You can purchase an annuity to draw payments against in retirement as a supplement to tax-advantaged or taxable savings accounts. But what if you want to… read more…
- How Dividend Payouts Work for Investors
Dividends are bonus payments companies give to stockholders, offering immediate income while you wait for potential future gains if the stock price rises. They serve as both a reward for investors and a confidence booster for the company’s stock. While investing in dividend-yielding stocks can provide extra income and an upfront return, it’s important to… read more…
- What the Current Yield of a Bond Tells You
Bonds can help the federal government or other agencies raise money for specific projects. They’re like loans that investors make to government agencies or corporations. A bond’s face value will give an investor some idea of what it’s worth. However,… read more…
- What Is a Fixed Annuity and How Does It Work?
A fixed annuity is the most straightforward type of annuity, as it pays a predetermined interest rate on your account balance. According to the terms of your contract, your rate will last for a specific period of time. At the end of… read more…
- Convertible Bonds: What Investors Need to Know
Convertible bonds are just one way to expand your investment portfolio beyond the traditional stocks you may already be investing in. This type of bond can offer the potential for higher returns to investors, but they also carry certain risks.… read more…
- What Are Treasury Yields and Why Do They Matter?
Treasury bonds and bills can be an important part of your investment strategy. However, Treasury yields will determine their value to your portfolio. Treasury yields represent how much profit you earn by buying U.S. Treasury bonds, bills or notes. They… read more…
- The Municipal Securities Rulemaking Board (MSRB)
The Municipal Securities Rulemaking Board (MSRB) exists because cities can’t always be trusted with their municipal bonds. Investing in bonds already involves a degree of risk. The MSRB exists to prevent municipal bonds, notes, and other securities from becoming overly… read more…
- How Do Zero Coupon Bonds Work?
A zero coupon bond doesn’t pay interest, but it could pay off for your portfolio. Choosing between the many different types of bonds may require a plan for your broader investments. A zero coupon bond often requires less money up… read more…