DIVIDEND CLAWBACK

Today's word: DIVIDEND CLAWBACK Theme for this fortnight: DIVIDENDS An arrangement under which those financing a project agree to contribute, as equity, any prior dividends received from the project to cover any cash shortages. When there is no cash shortfall, those investors who provided funding are able to keep their dividends. A dividend clawback arrangement provides incentive for a project to remain on budget so that investors...

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DIVIDEND DRAG

Today's word: DIVIDEND DRAGTheme for this fortnight: DIVIDENDS A disadvantage of the dividend structure of unit trust exchange-traded funds (ETFs) that results from SEC rules that stipulate that passively managed ETFs cannot reinvest dividends back into the portfolio. ETFs must instead accumulate the dividends in cash and pay them to holders at periodic intervals. During periods of rising markets, the dividends would be better served...

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SYNTHETIC DIVIDEND

Today's word: SYNTHETIC DIVIDENDTheme for this fortnight: DIVIDENDS A type of incoming cash flow that an investor creates with certain financial securities to produce a dividend-like payment stream that resembles the periodic cash receipts from a dividend-paying stock. For example, suppose an investor owns shares in a company that does not pay a quarterly dividend. In order to create a cash-flow stream from the shares, the investor...

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SPILLOVER DIVIDEND

Today's word: SPILLOVER DIVIDEND Theme for this fortnight: DIVIDENDS    A type of dividend in which the payment year and the taxable year occur at different times. Most often, this occurs when the dividend has been declared near the end of the calender year (during the fourth quarter), but the actual distribution date of the dividend payment does not occur until the first quarter of the following year. &nbs...

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LOOK THRU

Today's word: LOOK THRU Theme for this fortnight: DIVIDENDS   A complex provision defined in section 954(c)(6) of the U.S. Internal Revenue Code that lowered taxes for many U.S. multinational companies. The look thru rule gave qualifying U.S. multinationals a lower global effective tax rate by providing a special accounting method for calculating taxes owed on income from controlled foreign corporations. The rule was originally...

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DIVIDEND PUZZLE

Today's word: DIVIDEND PUZZLETheme for this fortnight: DIVIDENDS The question concerning why companies pay dividends. According to some theorists, investors should not need dividends as an incentive to purchase stock in a company. Thus the question of why some firms pay dividends is a puzzle. &nbs...

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HOMEMADE DIVIDEND

Today's word: HOMEMADE DIVIDEND Theme for this fortnight: DIVIDENDS A form of investment income that comes from the sale of a portion of shares held by a shareholder. This differs from dividends that shareholders receive from a company according to the number of shares the shareholder has. The existence of homemade dividends is the reason some financial analysts believe that looking at a companies dividend policy is not important....

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CUTTING A MELON

Today's word:  CUTTING A MELONTheme for this fortnight: DIVIDENDS A slang term used to describe when a board of directors declares an additional dividend in addition to the regular distribution. The additional dividend can be in the form of cash, stock or property. The board of directors (BOD) is responsible for deciding how it will share the company's earnings with shareholders in the form of dividends. In most cases, dividends are issued...

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VRITTAM (03 NOV 2013 - 09 NOV 2013)

THE WEEKLY FINANCIAL NEWS  Twitter falls 7% after opening day bonanza Twitter stock slipped 7.24 percent to close at $41.64 -- a day after a stunning gain of 72.69 percent on its first day of trading on the New York Stock Exchange after a $1.8 billion initial public offering. Some analysts said the debut was helped in part by a shortage of Twitter stock, and that most of the 70 million shares were reserved by the underwriters.  ...

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BIRD IN HAND

Today's word:  BIRD IN HAND Theme for this fortnight: DIVIDENDS   The belief that investors prefer stocks that are currently paying dividends to stocks whose value may grow through capital appreciation. The belief is based on the assumption that most people prefer certainty (dividends) to speculation (capital appreciation). &nbs...

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