The hidden curse of bank stocks

Want to really know why bank stock prices have tanked? Look a little deeper.

Summary: When banks and other listed companies increase the number of shares on issue, they effectively dilute the dividend that each share receives. This can have a significant impact on the performance of investments, because even when bigger profits are posted, if more shares have been issued then the profits will be spread across more shareholders in the form of dividends. This can reduce the power of your holdings to generate income.

Key take out: Investors should look at the financial statements for the stocks they own to track the number of shares on issue and understand the performance of their ownership stake.

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