Carnival just raised the dividend

[bepsf]

I'm sure our CC friend Brian from SF who is a finance professional could correct me on this and it has been pointed out numerous times.

 

Using the correct terminology an onboard credit is not a a "dividend". You receive a dividend as a shareholder of CCL. More properly you should consider it as a benefit or discount IMHO similar to being a holder of an American Express card and receiving points.

 

In addition, consider that you have to pay $4600 at current prices to own 100 shares of CCL plus you have to spend all that additiional money to go on 35 day (est $4000 p/p) and 14 day (est $2000 p/p) to receive the benefit. Basically you've spent $16,600 and gotten $500 OBC (discount of about 3%).

 

In addition and separately you've gotten a small dividend amount added to your brokerage account. But you've assumed the possibility that you could lose principal on your $4600 investment which might more than offset any perceived gains you have received in your suggested model.

 

You should only invest in the shares of CCL if you think the value of the corporation will increase in value thus resulting in a higher share price. Otherwise your money could possibly be earning a better return elsewhere.

 

Of course you are entitled to your own view of the situation.

 

Good Synopsis.

A dividend is taxable income - an OBC is a non-taxable benefit.

Plus whenever a dividend is announced, the price of the stock is automatically adjusted up by the dividend amount per/share to compensate for the dividend - This prevents individuals from making purchases specifically to profit from dividends post-announcement.

[serendipity1499]

Good Synopsis.

A dividend is taxable income - an OBC is a non-taxable benefit.

 

Plus whenever a dividend is announced, the price of the stock is automatically adjusted up by the dividend amount per/share to compensate for the dividend - This prevents individuals from making purchases specifically to profit from dividends post-announcement.

 

Is that why it increased so much today? Does that mean, that we should expect the price per share to go down after the dividend is paid?

Betty

[m steve]

In fact they often go up as investors see a benefit in that. It can drop a bit when it exdividends to adjust for the pennies being paid. Even when a stock splits and now there are 2x as many shares so your individual share is worth less, many investors jump in and buy at the lower price as they expect it to increase .

[bepsf]

M Steve is correct:

From Investopedia:

"A stock trades ex-dividend on or after the ex-dividend date (ex-date). At this point, the person who owns the security on the ex-dividend date will be awarded the payment, regardless of who currently holds the stock. After the ex-date has been declared, the stock will usually drop in price by the amount of the expected dividend."

[oreilln]

For a 14 or more day cruise, the credit is $250. The stock is now $46 a share. So you have to decide whether to spend $4600 for a $250 credit.

 

Many thanks for that information. I think I was miscalculating the cost!

[serendipity1499]

SNIP>

 

In addition, consider that you have to pay $4600 at current prices to own 100 shares of CCL plus you have to spend all that additiional money to go on 35 day (est $4000 p/p) and 14 day (est $2000 p/p) to receive the benefit. Basically you've spent $16,600 and gotten $500 OBC (discount of about 3%).

 

<SNIP>

 

.

 

IMO there is a flaw in your math..Do you honestly believe those of us who own the stock only purchase the longer trips to get the higher OBC?

Many non-stockholders book the long cruises even if they don't have CCL stock..For many years we booked the longer HAL cruises, before finally getting the nerve to purchase CCL shares in the teens..We would still book the longer cruises even if we did not have the stock...The $600 OBC, received in the past two years is an extra bonus to us..We bought the hundred shares, knowing full well that we could lose it too... It's like playing the slot machines in the casino:eek:...

It's been so much fun keeping the log of the stock prices on a bi-weekly basis since purchasing it, even though most of our other investments are probably paying better...;)

Cheers....:)Betty

[DutchByAssociation]

to 25c per share. That's 150% above to last one. Next paid in March. They are having a good year.

 

I certainly loved the news when it came through! :D