Dividends and US companies seize on window to sell stock

If you own a stock and the price goes up, that is a good thing and it validates your homework to why you wanted to buy the stock. If the sector in which your stock is in goes up, various private equity owners and CFOs are looking for the opportunity to sell stock. There are many reasons why stock is sold by the company including at times it is less expensive to raise money by selling stock than by issuing debt. The important aspect is a rising stock market.

In an article by Echo Wang and Lance Tupper of Reuters, stock sales reached $4.97 billion in the first week of March, the highest tally since the second week of 2022, according to Dealogic.

Some of the companies issuing stock were American Water Works of $1.7 billion. food giant Mondelez which makes Oreo cookies sold $1 billion stake in Keurig Dr Pepper. Private equity firms Blackstone sold $270 million in dating ap Bumble; and Providence Equity Partners sold a $333 million stake in software provider Double Verify Holdings Inc.

In 2022 according to Dealogic, companies sold $72.5 billion worth of stock sales for public companies, the lowest level since 1996 and 67% below the number for 2021.

Linking to dividend paying stocks, when the stock market is rising, many stock deals come to the fore front and are executed. Wall Street firms make good income from selling stock and institutions with cash eventually need to use the cash to buy stock. As a holder of dividend stocks, you do not have to anything until the dividend is paid and then you can decide to reinvest in the company, invest in other companies or wait till the market falls. When the market falls there is more value if your time perspective is longer than 6 months. Often you can buy good dividend paying stocks at lower prices, have the luxury of waiting for the stock to trade at its original multiple and you make both dividends and capital gains.

There are more questions than answers, till the next time – to raising questions.


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