How are US share prices listed?

Gin_and_Milk

I realise this is probably a daft question but I'm interested in buying some shares in a US company whose share prices have been doing well over the past 5 years. I know that share prices listed in GBP are listed in pence so that 500 =£5, but are US share prices listed cents i.e. 500 = $5? I'm guessing this is the case as share prices can fluctuate by such a small amount, but I just wanted to ask here first to spare any potential blushes later down the line!

I'm currently looking into buying them from either the Halifax S&S ISA or Hargreaves Lansdown (although I need to research these more thoroughly first). I had a quick look at Vanguard as I thought an American company would be the best bet, but I found their website quite difficult to understand. That said, it would be good if I could spend a few hours doing some research instead of an hour or two here and there!

I'm aware that share prices can fall dramatically, so I'm going to invest a relatively small amount and open a bond account so I don't spread myself to thinly.

Thanks in advance
Gin

antrobus

Gin_and_Milk wrote: »

I realise this is probably a daft question but I'm interested in buying some shares in a US company whose share prices have been doing well over the past 5 years. I know that share prices listed in GBP are listed in pence so that 500 =£5, but are US share prices listed cents i.e. 500 = $5? ....

US share prices are normally in dollars. The Americans prefer 'heavy' shares for some reason.

Gin_and_Milk

Oh, so 500 would =$500 then?
Best start looking elsewhere!

tmsbry

What's the stock? & I'll look it up, normally it is priced in cents/dollars

[Deleted User]

Hi,

you can buy an Apple share for $119.

Gin_and_Milk

It's Amazon, currently listed as 672.64

Gin_and_Milk

I'm feeling pretty stupid now. Oh dear!

bigadaj

antrobus wrote: »

US share prices are normally in dollars. The Americans prefer 'heavy' shares for some reason.

That's interesting because the opposite is the case for many uk shares. You often see share splits for uk companies when they get above£10, though it does vary. The miners seem to like to be heavy in the uk.

Gin_and_Milk

bigadaj wrote: »

That's interesting because the opposite is the case for many uk shares. You often see share splits for uk companies when they get above£10, though it does vary. The miners seem to like to be heavy in the uk.

This is one of many reasons why I'm confused! :rotfl:

Strummer22

In America they do seem to pay a lot of attention to the raw value of the share. Some investors advise that you don't invest in companies with value below $10 or $1. Like you, I don't really understand why this is though. The nominal value is of very little use when working out whether or not you should buy a stock! It's down to earnings per share, growth prospects etc.

One area where a hefty share price can be a disadvantage is in dividend reinvestment. Most people will reinvest their dividends for additional long term gain. I'm going to use some shares I own as an example as to how this doesn't work with heavy shares, and why it makes sense for companies to split shares when the nominal value gets very high.

I bought 31 shares in wind turbine manufacturer Vestas earlier this year. The company paid a dividend in May when the share price was near £25. The dividend yield is low, around 1%, so I got 31x25p = £7.75. My share trading platform will buy more shares in the company for me if it can, but as you can see, £7.75 isn't enough so that money just sat as cash in my account instead. I don't know too much, but I think it benefits the company for its investors to reinvest, as it keeps a steady trickle of their stock being bought and helps support the share price. A company that splits its stock (which doesn't affect the value or the profitability of the company) will allow more small investors to benefit from dividend reinvestment.

Amazon stock doesn't pay a dividend at the moment, but you can see how a large stock price prevents small investors reinvesting their dividends!

grey_gym_sock

reinvesting dividends is a good idea (if you aren't spending the income), but you don't necessarily have to reinvest each dividend in the same company that paid it. i prefer to let the cash from dividends pile up until it amounts to at least a few hundred £, and then use that to top up 1 of my shareholdings (perhaps whatever is currently down in price).

this approach may also cost less in dealing commissions, depending on how your broker charges. some let you use a cheaper "regular investment" facility to mop up dividends (even if the amounts you're investing are actually erratic, depending on how much you've just received in dividends).

so far as companies are concerned, they won't care about ppl who aren't reinvesting because they only have less than the price of 1 share in cash. tens or hundreds of pounds times thousands of small shareholders won't amount to a significant sum from the point of view of the companies.