I want to share a great question asked by one of my viewers during last night’s show:

What’s the deal with dividends – why do some stocks offer them and others don’t?

Thanks, Michelle

In reality, companies are buying back their own stock or issuing dividends; both are considered ways of sharing the profits with their shareholders, however, there is a profound difference.

A buyback makes your shares more valuable because there are fewer outstanding shares, and dividends are payments to a company’s shareholders that are typically sent out on a quarterly basis. The thing is, companies are plowing so much money into buybacks that it means fewer funds for those dividend checks. In the last three years, the S&P 500 have bought back $1.49 trillion of their own shares.

During that time, they only issued $974 billion in dividends. The result is that the dividend yield (which is the percent of dividend payment versus the value of share price) is near an all-time low of 1.9%, the historic yield is 4.4%.

This trend has helped stocks move higher, but it hurts retirees and others looking for a nice, steady, and healthy return.

Note: buyback announcements are mostly promises, but a plan that may or may not happen, whereas a dividend is a promise that takes more confidence to make.

Today’s Session

Following the release of the October employment report, the major indices reversed and began trading in the red, save for the NASDAQ which managed to stay in the green, though still lower than before the release. For the month, employment rose by 214,000 jobs, which was significantly lower than the revised gain of 256,000 from the prior month. Also, the jobless rate dropped to 5.8% from 5.9% in the previous month. Hopefully corporate America continuing to deliver positive news in the form of earnings beats and strong revenue growth will help get the rally back on track. Below is a chart of companies that reported after the close yesterday and earlier this morning.