Rocky Stock Markets
The markets are decidedly rocky right now and it's time to be much more cautious when it comes to selecting shares to buy.
My view is to be wary for the time being of tech companies, loss-making companies and the small risky penny shares.
I'm going for growing small growth companies with rising profits, dividends and earnings.
Even in this down market the strategy has paid off for me.
Shares I've bought in the last ten weeks in Havelock Europa, VP Group, White Young Green, 600 Group and Sondex have all motored higher despite the market gloom.
That's because all these companies have solid and growing earnings.
When researching shares, one of the things I always look for is a gradually increasing dividend - it shows the company is confident of future earnings - and it's nice to get those cheques!
Dividends are probably the topic I get e-mailed about most. Many investors seem to be unclear about when they should get their payouts and how much they will be.
It's really quite easy and all the info you need is here on ADVFN (Go to the Toplists tab).
Dividends simply are cash that you receive usually twice a year from a company in which you've invested.
They may at first glance seem to be quite small amounts - but I can promise you, over the years they can add up to an awful lot of money.
Some companies pay out more in payments than you'd get in a building society. So not only are you getting a capital gain, but interest too!
So how do you find out when the company is likely to send you some money, and how much it will be?
Just go the ADVFN quote page of the share you're interested in and press "financials".
Scroll down and on the left you'll see "dividend yield" - that shows the percentage dividends over the year. So if it says more than 4.5%, you're getting paid out in dividends more than you would be getting interest in a building society! To find out dividend dates, scroll down a bit further until you get to "dividends".
You'll soon see all the dividend payouts over the last few years. The top line shows the date of the next dividend.
You can see the amount of the payout in pence.
Now a question that must be in the top ten questions I get asked about shares.
When do you have to be holding the share to get the dividend?
It's quite easy. You'll see the "ex-date" in the middle of your screen.
On that date the share is trading "ex" or without the dividend. So if you held the share up to and including the close of play the day before "ex" date you are entitled to the dividend.
If you buy the shares on the ex date you are not entitled to the dividend.
"Record date" is usually two days later than ex. - that's the date where they go through the share register and make a list of all holders entitled to the dividend. I personally ignore this date. The main rule to remember is: buy before ex date if you want the dividend.
And when do you actually get the readies?
That's under "payment date" further along the line on ADVFN. You usually get paid out 4-6 weeks after ex.
Now often new investors say to themselves.. "Aha! I'll just buy the day before ex date and sell early on the ex date. That way I'll pick up the dividend without exposure to the share - free money!"
Nice try! The market has thought of this not-so-cunning ploy!
Sadly, what happens on "ex" day is that the share will usually start the day lower by the amount of dividend.
So if you bought the day before "ex" and sell the day after, you won't make an instant profit.
Dividend payments and amounts are normally announced whenever a company makes it's twice-yearly results statement.
You'll usually find a paragraph in the results, which states the next ex and payout dates.
You really ought to know the dates of ex-dividends on your shares.
If you aren't aware of an ex day you might panic and sell because you thought the share was being sold off, or it had dropped through your stop loss.
So pay attention to "ex" dates!
Lists of forthcoming dividend ex dates can be found on ADVFN's premium lists under "dividend summary".
I wish you all good luck in your trading during these difficult times...