Important Stock Events

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  • Stock Dividends

Dividends are a kind of small reward that a company pays its shareholders from its earnings. It is a general concept that value stocks yield great dividends, but they experience slower growth. Contrarily, the growth stocks are not lucrative in terms of dividends but they have great growth rates and yield great returns in the form of capital gains through stock trading. It is pertinent to mention that value stocks are good for long-term investments while growth stocks are great for wealth maximization. Growth stocks have less return in the form of dividends because the companies reinvest their net profit for achieving a high rate of growth. However, the companies with less growth rate have usually attained maturity stage of their business cycle. The significance of this event is dependent upon investor’s rationale behind the investment. For instance, it matters only to the investors having an intention of long-term stock holding.

  • Stock Split

Stock Split is an event when a company announces the issuance of more shares against previously issued shares. For instance, in a 2-for-1 split, a firm issues another share against every share that was issued before. After the split, every share is replaced by two new shares for a sum of the same face value. This does not imply changing the monetary value of the shares you own. For a book of accounts, a stock split is not considered as an event because it has no effect on the book value of outstanding shares. However, as per historical trends and general observation, the market price of the share gets drastically increased. For investors and speculators, it is a great event since it is perceived as a positive insight amongst the traders and other stakeholders. However, the chances of speculation and overpricing get increased by manifolds.

  • De-listings

In order to get listed in the stock exchange, a company must fulfill minimum listing requirements. For instance, these include a minimum number of outstanding shares, requisite volume of market capitalization, and limit of annual income with respect to market capitalization. De-listing is hence a significant event that leads numerous trends to the market. These trends include increased share price of rivals, certain market corrections, and a decrease in the price of suspected shares. Prolonged noncompliance of minimum listing requirements can result in de-listing. Following are some of the potential reasons that can make a company de-listed:-

  • Mergers and acquisitions
  • Constant reduction in share price
  • Breach of Rules and Allied Regulations
  • Insolvency
  • Volunteer withdrawal

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