Recommended portfolio from DNB Carnegie

When a share produces a dividend yield it means that the company normally issues a dividend to the shareholders when and if the company produces a good profit.

The size of the dividend to be distributed per share is determined by the AGM every year. The dividend is normally paid directly into the shareholder’s account. Dividends can be paid out annually, biannually or quarterly.

To diversify means ‘to make versatile’. In finance, this means spreading your investments across different products and markets. Diversification in a share portfolio means that you have several shares, spread across companies that operate in different markets and industries.

Diversification spreads your risk when the economies are unstable. It reduces the risk and increases the chance of returns.

EPS stands for ‘earnings per share’.

P/E, or P/E Ratio is an abbreviation for Price/Earnings.

P/E thus estimates a company’s market value by looking at the share price against actual earnings. The purpose of calculating the P/E is to find out if a share is expensive or cheap.

P/E can also be called ‘multiple’ by analysts.

Low multiples, or a low P/E, can either mean that a share is underpriced, or that a reduction in earnings may be expected.

A high multiple indicates either that the company has a promising future, or that a bubble may have driven the price disproportionately high.

Read more about P/E and how to calculate it on Wikipedia

A portfolio is used in finance as a term for an investor’s total investments in shares, equity funds and other capital investments.

Example: If you have savings invested in a mutual fund and also own eight different shares, altogether these investments constitute your portfolio.

In finance, ‘multiple’ is used interchangeably with P/E, i.e. a calculation of a company’s earnings against the price of the share.

The multiple indicates both risk and growth expectations. High risk and low growth expectations lead to a low multiple and low value, while low risk and high growth expectations lead to a high multiple and high value.

The use of multiples to value a company means multiplying a company’s pre-tax profit by a chosen P/E. The P/E is then the multiple, while the pre-tax profit is the scaling factor. The size of the P/E is affected by the multiples at comparable companies or ‘Peer Groups’. This can be multiples from other publicly listed companies or transactions that have already taken place.

A cyclical share is a share in a company that does well when the general economy does well. And vice versa. These shares normally increase in value in upturns and decrease in value in downturns.

A dividend is a cash disbursement per share that is paid out to the shareholders when the company generates good profits.

The size of the dividend that may be paid out to the shareholders is determined by the Annual General Meeting (AGM).

Not all companies have a dividend policy.

A dividend is also called profit distribution or dividend yield.

Growth shares are shares in companies that are priced high based on investors’ expectations of future growth and earnings.

These companies do not need to do well today, the share price is based on what investors believe will happen in the future.

Value shares are shares in companies that have good turnover and earnings today.

To diversify means ‘to make versatile’. In finance, this means spreading your investments across different products and markets. Diversification in a share portfolio means that you have several shares, spread across companies that operate in different markets and industries.

Diversification spreads your risk when the economies are unstable. It reduces the risk and increases the chance of returns.

Read more about diversification here.

EPS stands for ‘earnings per share’.

P/E, or P/E Ratio is an abbreviation for Price/Earnings.

P/E thus estimates a company’s market value by looking at the share price against actual earnings. The purpose of calculating the P/E is to find out if a share is expensive or cheap.

P/E can also be called ‘multiple’ by analysts.

Low multiples, or a low P/E, can either mean that a share is under-priced, or that a reduction in earnings may be expected.

A high multiple indicates either that the company has a promising future, or that a bubble may have driven the price disproportionately high.

Read more about P/E and how to calculate it on Wikipedia

A portfolio is used in finance as a term for an investor’s total investments in shares, equity funds and other capital investments.

Example: If you have savings invested in a mutual fund and also own eight different shares, altogether these investments constitute your portfolio.

In finance, ‘multiple’ is used interchangeably with P/E, i.e. a calculation of a company’s earnings against the price of the share.

The multiple indicates both risk and growth expectations. High risk and low growth expectations lead to a low multiple and low value, while low risk and high growth expectations lead to a high multiple and high value.

The use of multiples to value a company means multiplying a company’s pre-tax profit by a chosen P/E. The P/E is then the multiple, while the pre-tax profit is the scaling factor. The size of the P/E is affected by the multiples at comparable companies or ‘Peer Groups’. This can be multiples from other publicly listed companies or transactions that have already taken place.

Read more under P/E

RSI is an indicator used in technical analysis. RSI stands for “Relative Strength Index”.

Relative Strength Index is used to assess whether a share is “oversold” or “overbought”. The figure is calculated on the basis of tempo and strength in changes and takes into account relative changes from day to day over a short period. The lower the value, the better, if you’re considering a purchase. It’s an indication that sellers are close to having sold out. At a very high value, the question is where any new buyers will come from. The RSI figure is calculated using a model and returns a value between 0 and 100.

A cyclical share is a share in a company that does well when the general economy does well. And vice versa. These shares normally increase in value in upturns and decrease in value in downturns.

Read more about cyclical shares here.

A dividend is a cash disbursement per share that is paid out to the shareholders when the company generates good profits.

The size of the dividend that may be paid out to the shareholders is determined by the Annual General Meeting (AGM).

Not all companies have a dividend policy.

A dividend is also called profit distribution or dividend yield.

Growth shares are shares in companies that are priced high based on investors’ expectations of future growth and earnings.

These companies do not need to do well today, the share price is based on what investors believe will happen in the future.

Value shares are shares in companies that have good turnover and earnings today.