Insider Tip: Keep an Eye on Earnings Statements

by David Jenyns on July 8, 2009

Consequently, the company’s gains per share are of great interest to him.

The prime reason for such keen interest in gains is that the dividends per share, as declared by the board of directors, will depend upon the gains; should gains be very poor, there may be no dividend at all; should gains be quite modest, the dividend may be small; should gains be good, then dividends will be more generous.

Perhaps the most common error into which many common-stock owners fall is relative to dividends. Should business conditions be good, then a given company may enjoy continued success, and its dividends may be steady and even increase; should general business conditions take a turn for the worse, it may happen that gains will fall sharply and the dividend rate may be reduced or perhaps even suspended for a period of time.

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