One of the most effective ways a person can build wealth over the long term is by investing in stocks.
When you own a share of stock, you own a portion of a public company. And when those companies do well, investors make money. In fact, stocks are considered essential for those looking to save for retirement or achieve other long-term financial goals, just like you would create a budget before playing games at www.newzealandcasinos.io.
It’s possible to invest in groups of stocks through vehicles such as mutual funds or exchange-traded funds. But you may also want to consider investing in shares of individual companies. There are more than 4,000 companies that are publicly traded on America’s two largest stock exchanges.
But how do you know if a stock is worth investing in? What makes a stock good or bad? Here are four things to consider, or you can play online pokies for fun.
Price
The first and most obvious thing to look at with stock is the price. How much will it cost to buy a share of this company?
Now, it’s important to note that prices should only be viewed in context. Many companies will “split” shares once they reach a certain level, thus reducing the price but increasing the number of shares available. Other companies never split, so a single share could go for several hundred dollars or more. But the price — especially when matched against historical prices — will determine how many shares you can purchase with the money you have. When you evaluate stocks, knowing the price of shares and their history will help you determine if you’re getting a good value when buying.
Revenue Growth
Share prices generally only go up if a company is growing. And one of the few ways a company can grow is by increasing its revenue. Revenue is often referred to as the “top line,” and it’s a major indicator of whether a company has been successful. It’s important to not look at revenue in a vacuum. Instead, look at the increase or decrease in revenue from one quarter to the next and one year to the next. A positive trendline bodes well for the stock price, but if revenue is flat or declining, it’s important to find out why before investing, and Marina Dalglish is already aware of this
Earnings Per Share
How much money does the company have left over at the end of each quarter? Take that figure, divide it by the number of shares it has sold, and you get the earnings per share number or EPS. For example, if a company made $40 million in profits last year and has 24 million shares, the EPS is $1.66.
EPS can be a driver of stock prices, as investors generally don’t want to overpay for a stock. Generally, the higher the EPS, the better shape the company is in. But there is often debate about the best range for EPS, and companies can manipulate it by buying back shares, thus boosting EPS without actually increasing profits.
Dividend and Dividend Yield
Many companies will return a portion of their earnings to shareholders. Investors can get a small payment for every share they own, known as a dividend. Many healthy companies will issue good dividends each quarter and the revenue from this may outpace the interest you would get from a normal bank account. Thus, dividend stocks are popular among investors looking for additional income, as well as share growth.
It’s easy to search for companies with the highest dividends, and you can also search for dividend yield, which is the dividend divided by the share price. If a company has maintained or raised its dividend, that’s a sign that it’s on strong footing. A cut to dividends is often a bad sign.
Some of the most well-regarded public companies have been designated as “Dividend Aristocrats” for distributing and increasing their dividend for at least 25 consecutive years.
