SMG FE 101 Lecture Notes - Lecture 7: Dividend Yield, Retention Rate, Retained Earnings
6 Jun 2018
School
Department
Course
Professor
Common Stock
- Represented by Board of Directors
- Shareholder rights:
-Voting (on directors, mergers, other major events)
- If you own 1000 shares, you get 1000 votes
-Annual meetings - managers and directors answer shareholder questions;
shareholders vote for directors and other proposals
-Proxy -a written authorization for someone else to vote you shares
instead of you voting
-Proxy contest - 2 or more groups compete to collect the most proxies
- Dividends - not required
- Shareholders are paid dividends in proportion to # of shares they own
Preferred Stock (not often given)
- Gets dividends/cash during liquidation before common stockholders
- Preferred stock: equity or debt?
- Preferred stock is treated as equity
- If there is a dividend to be paid, preferred stockholders get it FIRST
Ticker symbol - unique abbreviation assigned to a publicly traded company (aka stock name)
- Ex: Nike ticker symbol: NKE
Market Capitalization = # of shares outstanding * price of stock being traded for
Volume = How many shares are being traded on the daily basis
P/E = Price equity = market price / EPS
EPS = net income /shares outstanding
What to do with earnings (aka net income)?
1. Pay out in form of dividend
2. Or keep the money
- Keep money to invest in new project and help company grow
Dividend payout ratio = %EPS paid as a dividend
Price of stock today is the sum of whatever that happens in the future
rE = Dividend yield + capital gain rate
How to increase earnings:
- Increase sales
- Reduce expense
Document Summary
Shareholder rights: shareholders vote for directors and other proposals. Voting (on directors, mergers, other major events) If you own 1000 shares, you get 1000 votes. Annual meetings - managers and directors answer shareholder questions; Proxy -a written authorization for someone else to vote you shares. Proxy contest - 2 or more groups compete to collect the most proxies. Shareholders are paid dividends in proportion to # of shares they own. Dividends - not required instead of you voting. Gets dividends/cash during liquidation before common stockholders. If there is a dividend to be paid, preferred stockholders get it first. Ticker symbol - unique abbreviation assigned to a publicly traded company (aka stock name) Market capitalization = # of shares outstanding * price of stock being traded for. Volume = how many shares are being traded on the daily basis. P/e = price equity = market price / eps.
