Ask the Fool

Q My stocks' dividend yields vary from less than 1 percent to more than 3 percent. What's a good number? Should I sell the low-yield shares and buy high-yield ones?

- H.W., Tucson, Ariz.

A It may seem that the higher the yield, the better, as it means you'll collect more money from your investment. But keep in mind two things: Companies with low or no dividend payments can also be terrific holdings. They may have more pressing uses for their excess cash than paying it out to shareholders. For example, if they plow it back into the company, to help it grow, shareholders will also benefit.

Meanwhile, among those firms that do pay dividends, it's very useful to check out just how quickly that dividend has grown over time. A 1 percent yield can be more attractive than a 2 percent one - if, say, the company has hiked its dividend by an annual average of 15 percent in recent years. You might then expect the former dividend to quadruple over a decade, while the latter one, if it grows at just 4 percent on average, may not even double. IBM's 10-year average dividend growth rate tops 14 percent, while Nike's tops 19 percent.

Q What's the "closing tick"?

- R.B., Lakeland, Fla.

A It measures the buying vs. selling activity for the very last trades of the day. To calculate it, take the number of stocks that ended on an uptick (i.e., their last trade occurred at a price higher than the previous one) and subtract the number that ended on a downtick. A positive number suggests an overall upbeat day, while a large negative number would indicate a big sell-off in the market.

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