Have you made money from dividend companies?
I will be reposting some of my answers to the better questions I've gotten on Quora.
Have you made money from dividend companies?
Yes, although my experience will differ from the norm.
The company Peregrine Pharmaceuticals (PPHM) has a preferred stock (PPHMP) that still today throws off about 10%+ in dividends every year (payouts are quarterly, not monthly).
Anyway, the company failed to meet some endpoint criteria for their drug in testing and cancelled their trial for approval. This drug was the main one in their pipeline and most people invested in them because they thought this trial would succeed and the drug would go to market. With this failure the stock crumbled, sending the common stock (PPHM) to around $0.30 per share.
In fact, the panic was so drastic that even the preferred stock holders sold out. The nearly always stable preferred stock usually hovered around $20, but fell as low as $8 in the panic. Say what you will about the company's drug potential, but their balance sheet was beautiful. No debt and plenty of cash in the meantime to continue business. Cash flow was bad (as one would expect with a pharmaceutical research and development company), but they also had a side business of drug manufacturing that analysts estimated being higher than the then market capitalization. So I bought as much as I could from $9–$12. The panic eventually subsided as they continued paying their preferred dividends the following months and the preferred stock rose back to its $20 range paying dividends while I waited.
This isn't advice to buy it now as I haven't studied them after selling most of it around $20 for a nice profit. I still keep some in my portfolio to remind me to watch out for deals like those, and especially if it ever drops like that in a panic again. And in situations like that, never buy the common shares with money you aren't willing to lose because common shares often get diluted to raise capital. But since preferred shares have to pay 10% in dividends, issuing more preferred shares would be like taking a loan at over 10% interest.
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Nice post about investing @aerodart, upvoted! I’m trying to start a community about stock trading on Steemit. You can join our Discord channel SteemitStocks if you want to share your post and chat about stock trading. Would you also like to read my article about an undervalued oil exploration stock?