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Stocks FAQs
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Questions about dividends, proxy statements, company mergers, and other online stock market trading questions can be answered here.
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Why didn't I receive dividends paid out by a stock I own?
If the stock was purchased on or after the ex-dividend date (the first day the stock trades without the dividend), then you will not be entitled to receive this dividend payment.
What is diversification?
Diversification is achieved by spreading out your investments among different stocks. This way if a stock or sector suffers a downturn, your losses would be limited. This is simply the concept of not putting all your eggs into one basket.
I received a proxy statement in the mail, what should I do?
The SEC requires companies to send proxy statements to shareholders prior to a shareholder meeting. Since it is difficult for shareholders of all geographical regions to attend the meeting in person, the proxy statement gives a shareholder the right, not the obligation, to participate in a vote to elect directors or approve certain corporate decisions. To exercise this right, carefully read the statement to gain understanding on the issue, then cast your vote via the Internet, telephone or mail.
What's the difference between preferred and common stock?
In some aspects, preferred stock is similar to a fixed-income security. Dividends are fixed regardless of company earnings, and in the event of bankruptcy, preferred stock has priority to the company's assets over common stock. However, preferred stock has limited voting rights and some preferred stocks come with a call provision to protect the issuer.
What happens to my shares when the company is merged?
If you own shares of a company that is being merged into another corporation, depending on the terms of the merger, you could receive shares of the acquiring company in exchange for your shares at a predetermined ratio, or you will be given the option to sell your shares at a predetermined price.
The company announced good earnings today, why am I not getting dividends?
Although shareholders are entitled to dividends when paid out by the company, a company can choose not to pay dividends to shareholders, thereby retaining the earnings for reinvestment and other purposes. New companies usually reinvest most of their earnings, while established firms tend to pay dividends.
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