Login | April 20, 2024
How many shareholders?
THE MOTLEY FOOL
Ask the Fool
Published: January 21, 2020
Q: Can I find out how many people own shares of a certain company's stock? -- P.F., Pocahontas, Arkansas
A: It's very difficult, if not impossible.
You might start by looking up the company's annual 10-K filing with the Securities and Exchange Commission (SEC), via the SEC.gov website. For example, in PepsiCo's 10-K for its 2018 fiscal year, it notes, "As of Feb. 8, 2019, there were approximately 114,513 shareholders of record of our common stock." That seems like a lot, but it's probably grossly undercounting shareholders.
Shareholders of record have registered their shares in their own name. But nowadays, most shares of stock are held in "street name." That's when you buy through your brokerage and the shares are registered in the brokerage's name -- though you remain their owner.
Meanwhile, many mutual funds hold some PepsiCo shares, and their thousands of shareholders are generally not counted as owners of PepsiCo stock, either.
Q: I'm selling a stock. How do I determine my cost basis for tax purposes? -- H.L., Burlington, Vermont
A: Your brokerage might be able to tell you your basis. But let's say you buy 100 shares of Dodgeball Supply Co. (ticker: WHAPP) for $30 each and pay a $10 commission. Your cost basis is the purchase price ($3,000) plus the commission, or $3,010. Divide $3,010 by 100, and you'll get a cost basis per share of $30.10. If you eventually sell the shares for $40 each, or $4,000 -- again paying a $10 commission -- subtract the commission to get net proceeds of $3,990, or $39.90 per share. Your taxable capital gain is the difference -- $980, or $9.80 per share. (Many brokerages have recently lowered their trading commissions to $0, making the math a bit easier.)
Fool's School
How to Combat Inflation
We don't often think about inflation, but ignoring it can cost us severely. The long-term average rate of inflation is around 3%, which may not seem like much, but over many years it can really compound, shrinking your purchasing power.
For example, an average inflation rate of 3% over 25 years will more than double the average price of things. If you start saving and investing for retirement today and retire in 25 years with $1 million, that big nest egg won't buy as much in 2045 as it could today; it would only have the purchasing power of around $478,000 in today's dollars.
Fortunately, you can combat inflation. If you're aiming for a long-term average annual gain of 8% from stock market investments, subtract 3 percentage points for inflation, and you'll get a growth rate of 5%. If you're earning, say, 1% in a savings account, you won't be earning enough to overcome the effect of inflation.
Consider including lots of dividend-paying stocks in your stock portfolio, as many solid companies sport dividend yields of 3% or more, and healthy and growing companies tend to increase their payouts over time.
Instead of studying and picking stocks on your own, you might opt for a dividend-focused mutual fund or exchange-traded fund (ETF), such as the Vanguard Dividend Appreciation ETF (VIG), which focuses on dividend growth and recently yielded around 1.7%.
Even stocks and stock funds that don't offer much or any dividend yield can still serve you well by appreciating over time. So consider a simple, low-fee broad-market index fund, such as the SPDR S&P 500 ETF (SPY). It offers the market's return and recently carried a 1.75% yield.
In the bond world, look into TIPS (Treasury Inflation Protected Securities), which are bonds with interest rates that factor in inflation.
As you go about your financial life, keep inflation in mind.
My Smartest Investment
A Good, Long Story
My smartest investment was in IBM. I worked for the company and retired in 1993 with shares worth around $30,000. My cost basis in them was nearly $46,000 -- I'd lost money, overall. I hung on, though, and now, after some stock splits, I have four times as many shares, worth more than $300,000. I took the dividends from the shares in cash and used them for living expenses and to purchase more investments. The dividends from the last four years alone exceeded what I originally paid for the stock.
Meanwhile, we didn't buy any long-term care insurance, but I figure that if we need to, we can sell the IBM shares to cover that, and maybe even be able to deduct the medical expense on our taxes to offset some or all of the capital gains tax we'd face. If we don't need to sell the shares, the stock can end up donated to charity or left to heirs. -- R.L., Eyota, Minnesota
The Fool responds: That's great, all around! You learned that many great companies go through down periods, and experienced how robustly some stocks grow over long spans. Reinvesting dividends in more stock is a great way to turbocharge growth, too.
Your long-term care plan is a good one. Those who can't afford the care on their own should consider getting the insurance. It's pricey, though, and cheapest while you're still middle-aged.
Foolish Trivia
Name That Company
I trace my roots back to the 1886 creation of a combine harvester in Stockton, California. My equipment helped build the Hoover Dam and the Golden Gate Bridge. Today, based in Deerfield, Illinois, I'm a top maker of construction and mining equipment, gas engines, industrial gas turbines and diesel-electric locomotives. I have more than 100,000 full-time workers, rake in around $55 billion annually, and my 168 dealers serve customers in 193 countries. I boast 1.5 million active construction machines around the world. My brands include Progress Rail, SEM, Perkins, MWM and my own name. Who am I?
Last Week's Trivia Answer
I trace my roots back to Texas in 1968, when a family business was launched to sell wigs. Wigs soon fell out of fashion, though, so I shifted toward hair-styling tools. I licensed the Vidal Sassoon brand in the 1980s, very profitably. I added more brands under my umbrella over the years, including OXO, Hydro Flask, Vicks, Braun, Honeywell, PUR and Hot Tools. I'm based in Bermuda, with close to 1,500 employees and a market value that recently topped $4 billion. My mythical namesake was daughter to Zeus and a cause of the Trojan War. Who am I? (Answer: Helen of Troy)
The Motley Fool Take
Pfarmas Joining Pforces
The dividend of pharmaceutical giant Pfizer (NYSE: PFE) recently yielded 3.9%, making it rather appealing to income-seeking investors. Pfizer has long prioritized its dividend program, boosting its payout by 125% over the past 10 years.
Probably the biggest knock against Pfizer is that several of its former top-selling drugs have lost patent exclusivity, notably Lyrica. Declining sales for these drugs present a threat to the company's near-term growth prospects. However, Pfizer has a plan.
It's merging its Upjohn unit, which is home to the drugs that have lost patent protection (such as Viagra and Lipitor), with generic drugmaker Mylan -- forming a new company called Viatris. Joining forces with Mylan will allow Pfizer to focus its portfolio on newer and more innovative products -- and, hopefully, more profitable ones.
Pfizer CEO Albert Bourla expects that blockbusters such as breast cancer drug Ibrance and blood thinner Eliquis, and anticipated ones like rare-disease drug Vyndaqel, will fuel strong revenue and earnings growth for Pfizer through the mid-2020s.
After the Upjohn-Mylan deal is completed, Pfizer's dividend will likely shrink, but its shareholders will have received shares in Viatris, which will also pay a dividend. Give Pfizer, and its pipeline of products in development, a closer look.
COPYRIGHT 2020 THE MOTLEY FOOL, DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION, 1130 Walnut, Kansas City, MO 64106; 816-581-7500.