“I have been surprised how low U.S. long-term rates have remained in light of structural changes that are likely to lead to higher levels of long-term inflation including de-globalization, higher defense costs, the energy transition, growing entitlements, and the greater bargaining power of workers. As a result, I would be very surprised if we don’t find ourselves in a world with persistent ~3% inflation….
That’s why we are short in size the 30-year T – first as a hedge on the impact of higher LT rates on stocks, and second because we believe it is a high probability standalone bet. There are few macro investments that still offer reasonably probable asymmetric payoffs and this is one of them.”
 

—Bill Ackman, CEO of Pershing Square Investor Tips

Investment Returns

Bond Interest: Investors purchase corporate, municipal, or government bonds to earn a stated rate of interest every year until the bond matures. This interest is known as their return on investment (ROI).

Dividends: Investors purchase stocks in order to earn a cash dividend which the corporate board of directors will determine each year based upon how well the company did that year. The board may elect to give dividends to common stockholders in the form of additional shares of stock rather than cash, thereby increasing the company’s total number of shares outstanding. These are known as stock dividends. Note that the share price will decrease in order to adjust for the additional shares, as the company’s value will remain the same.

There are four dates to keep in mind with respect to dividends:
On the declaration date, a company announces the type and size of the dividend as well as the record date and the payment date.
The record date is the date a shareholder must be on the company’s books in order to receive the dividend. To clarify, if a shareholder owns shares on or before this date, then they will receive the dividend.

The payment date is when the dividend actually gets paid.

For new shareholders, the ex-dividend date is the date of disqualification for the next dividend payment; those who purchase shares on or after this date will not receive the dividend. Therefore, investors would need to purchase shares prior to the ex-dividend date in order to qualify.
Capital Gains — Realized vs. Unrealized: If an investor purchases ABC stock at $80 and it rises to $110, we would call that a $30 appreciation (or increase in value). Is that rise in value taxable? Not unless—and until—the investor sells the stock and takes the $30 gain. This would be called a realized gain once the sale takes place and an unrealized gain if the investor hangs on to the stock.