What is a ticker symbol?
Stock quotes provide pricing information for a particular stock including the bid and ask, last-traded price, and volume of shares traded. Stock quotes show a moment in time, meaning what the stock is trading for when the stock market is open (which can be moving up or down at any given time), and the last price of the day when the stock market closes at the end of the trading day.
What Are Dividend Stocks?
Investing in dividend-paying stocks is a common investment strategy. Dividends are essentially free money, though taxes do apply. But how do you know which stocks will pay dividends? Companies that pay dividends tend to be larger and more established. It is far less likely for newer companies to pay dividends. This is because newer companies may struggle to make consistent profits and the companies (and their shareholders) receive a bigger advantage from reinvesting funds from profits than from paying dividends.
Companies pay out dividends as a specific amount per share. Generally, the amount per share is only a few cents, but if you own a hundred or a thousand shares, the value obviously becomes greater. Companies typically have a fixed calendar for paying dividends but may choose to announce a dividend payment at any time. The idea is to reward you for choosing to be an investor in their company, while also increasing confidence in the company. Ideally, if the company has high enough profits to distribute some to shareholders, it must be doing well.
A stock that pays dividends is not necessarily better or worse than one that does not. If a company has a clear plan for growth that requires reinvestment of funds, this strategy may ultimately prove more valuable to the shareholder in the long run. This is because shareholders may earn more from a large growth in the stock of the company than they would from a small dividend payment. If you only invest in dividend stocks, you’ll likely miss out on other investment opportunities, such as mutual funds and other equity securities. That’s why it’s important to have a diversified portfolio. That being said, dividends have many benefits, so there are plenty of good reasons to include them as part of a diversified investment portfolio.
What is a Fractional Share?
A fractional share is a part of one share of stock. Fractional shares are often the result of financial decisions or actions by a company. For example, stock splits may result in fractional shares if an investor has an odd number of stocks. If two companies merge, they often combine stocks using an agreed upon ratio that may generate fractional shares. If you reinvest your dividends as part of a dividend reinvestment plan, you could end up with fractions of a share. You normally can’t buy or sell a fractional share on the stock market, but a brokerage firm can bundle several together to make a full share, sell you a percentage to complete your share, or split up full shares to sell fractional shares to new investors. Remember to always be mindful of trading fees, and all investments carry risk.EXAMPLE
Let’s say the fictional company Great Big Giant Co. has a stock that trades for $2,000 a share. A brokerage firm whose clients might like to own a piece of Great Big Giant Co. — but can’t afford even one share at that high price — could offer fractional shares: One-half share for $1,000, or one-quarter share for $500, etc.