2010 Penny Stocks

[mage lang="" source="flickr"]2010 penny stocks[/mage]
Penny stock paying 5-1 stock dividend…?

DENTON, TX, Nov 01, 2010 (MARKETWIRE via COMTEX) — Topaz Resources, Inc. (TOPZ) today announced that on November 1, 2010, the Topaz Board of Directors declared a share dividend of 5 additional shares of common stock for each share of common stock held by each shareholder of record as of the close of business on November 12, 2010. The effective date is scheduled to occur before market opens on November 15, 2010, though the exact record and payment dates are subject to regulatory processing.

What does this mean? I am going to get 5 shares for every share I have is the way I read it. What will it do to the price? Will it be cut to 1/5th the value ? Does this mean it is such a cheap stock that they are just giving it away? Why would they do this and should I sell it…? Obvious oblivious

The share price will drop 1/5th plus or minus whatever the market does that day. Many times companies pay a stock dividend because they don’t have enough money/earnings to pay $$$. It doesn’t change your equity position. It is also possible that the company is using it’s cash to invest in their business.

Not to give you a hard time but penny stocks are not really where you should be putting your money. They are thinly traded and easily manipulated and usually sold to unsophisticated investors looking to score big. If you want to gamble to to Las Vegas at least there are established odds for each game.

Penny Stock Protection #4

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