Business, Careers & Technology
capitalisation of US$560 billion and many economic experts believe this stock will reach US$1 trillion by the end of 2014. In Zimbabwe, there are a few of such high growth stocks but we have what may be termed recovering stocks. After a decade of decline, a number of companies are on the recovery path meaning they are likely not to pay a dividend but the share price will grow as the company recovers. Similarly, mutual funds or unit trusts will pay out interest and dividend income received from their portfolio holdings as dividends to fund shareholders. In addition, realised capital gains from a particular portfolio’s trading activities are generally paid out (capital gains distribution) as a year-end dividend. The other noteworthy term is the “dividend yield figure”. This is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. For instance, if company A declares a dividend of 100 cents while its share price is US$20 then its dividend yield will be five percent. However, if the share price is say US$40, then the yield will be 2.5 percent. A higher dividend yield indicates a good return on investment hence this is one figure an investor should look out for when choosing a company to invest in. Dividend cover is the ratio of earnings paid out to shareholders in dividends. These indicate the level at which earnings support dividend payments and in most instances, stable companies tend to have a higher payout ratio. Interest cover is also an important figure that should concern investors as well although creditors are keener on this one. Interest cover is a measure of the adequacy of a company’s profits relative to interest payments on its debt. The lower the interest cover, the greater the risk that profit (before interest) will become insufficient to cover interest payments ?6?&V???FW'26??V?B&R6??6W&?VBv?F?F??2f?wW&R2vV??&V6W6R?B??F?6FW2v?WF?W"F?W?7F?BF?&V6V?fRF?f?FV?G2?"??B??B?26VV?2&WGFW"?V7W&R?b6????( ?2FV'B?WfW&v??r2vV??2F?R??7B?bF?R?WfW&v??r??F?R'W6??W72?f?VR?b??&RF??Gv??2??&???6??6?FW&VB&V6??&?6fR?'WB6????W2v?F?fW'?f??F??RV&???w2??&WV?&R?WfV???v?W"?WfV??v?W&V26????W2F?B?fRfW'?7F&?RV&???w2??vV??&RfW'?6fRB??vW"?WfV??6???&??7?6?6?6????W2BF?R&?GF???bF?V?"7?6?R??vV???fR??r??FW&W7B6?fW"'WB??fW7F?'2v??&R6??f?FV?B?b&V6?fW'?????B&R?fW&?6??6W&?VB'?F?R&V?B&?6????fW7F?'26??V?B?????WBf?"F?W6Rf?wW&W2??F?RV&?6?VBf???6??&W7V?G2f?"F?V?F?vWBF?R&V?V6????27FGW2?bF?R6?????6?????????rBF?R6?V?BfVGW&W2????Bv?fRF?V?FWVFR??f?&?F?????&F??'???fW7F?'2????BV?FW'7F?BF?W6Rf?wW&W2'WB'&??W"?"f???6??Gf?6W"?2??&WGFW"?6?F???F?v?fRV?f?VBGf?6R???fW7F?'2?F?W&Vf?&R??W7B&?6?7V6?f???6??W?W'G2f?"76?7F?6R?E ??&WfW&???( ?2v?W&RV?G??f?VRbF7FR6??RF?vWF?W ??V?6????FV?fR??&&RFVâB?sCsC??&WfW&??????&&^( ?2&V?W"&W7FW&?@??&W7FW&?@??vR3 ??F?R&FR????&'v^( ?2??7B&VB?fW7G??R?v???P??fV''V'?#0??