How to read the financial pages
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4. Share prices in newspapers
You don't need to check share prices every day, but if you enjoy your investing you may want to. The prices, and supplementary information, is available in newspapers, on the television, and on websites if you want it. Click here for a generic example of a typical share page. Click here for an extract from the Financial Times.
Newspapers divide their share price listings into industry classifications which makes it easy to find the company you are looking for and to compare its price with the prices of other companies in the sector. The key information in these columns is:
- Name and notes
The company name, plus symbols indicating activities on the stock. - Closing Price
The second column shows the mid price at closing time on the previous day's trading. If at 4.30 you could have bought the shares at 109 and sold them at 105, the price in the newspaper would be 107 (halfway between the spread) and this is known as the mid price. If the price has xd (ex dividend) after it, it means that the company has recently announced a dividend but that if you buy the shares now you won't be entitled to receive it (the seller will). - Price change
This shows whether the closing price is higher or lower than on the day before, and by how much. - Previous price movements
The fourth and fifth columns show the highest price the share has traded at, and the lowest price it has traded at in the current year ie since 1st January. - Market capitalisation
The market cap is calculated by multiplying the number of shares in issue by the share price. This column shows the sum figure in £millions. - Gross dividend yield
This shows the percentage return on the share, before tax. It is calculated by dividing the gross dividend by the current share price. So if a share is trading at 120p and its annual gross dividend is 7p, the dividend yield is (7/120 x 100) = 5.8. The higher the dividend yield, the more income you are getting for every pound of share price. - Price/Earnings ratio (P/E)
This commonly used ratio is calculated by dividing the current share price by the company's earnings per share in the most recent trading year. For example, if earnings (profits) per share are 15p and the share price is 300p, the P/E ratio is 20. Note that dividend yield and P/E ratios move in opposite directions: as the share price goes up the dividend yield falls, but the P/E ratio rises.
Some newspapers use a slightly different presentation in their Monday edition. The Financial Times, for instance, has special columns showing:
- Weekly percentage change in the price of the share
- Net dividend
The post-tax dividend per share divided by current share price - Dividend cover
The earnings per share divided by the dividend per share. (e.g. 15p / 7p = 2.14). This tells you how many times over the amount being paid out as a dividend is covered by profits. - Dividend paid
This tells you the months when the company normally pays its dividends (usually twice a year). - Ex dividend date
The last day on which a dividend went 'ex-dividend' expressed as a day and month, or occasionally as a month and year. - Cityline
This is a number code which enables you to get live share prices over the telephone. You dial 0906 003 nnnn where 'nnnn' is the code of the company concerned. It's a premium line which costs 60p per minute.
Share prices of OFEX companies are listed in Saturday's FT, but can otherwise be accessed on www.ofex.com.
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