Ask TheStreet: Dividends

There are many risks involved with buying stock of companies in bankruptcy protection. Most of the time, it's a guaranteed way to lose money.

In bankruptcies, bondholders and unsecured creditors are paid from the company's assets before common stockholders. Although a company may emerge from bankruptcy as a viable entity, the creditors and the bondholders generally become the new equity owners -- and their first order of business is to cancel the existing equity shares.

In those cases where existing shareholders do get to participate in the reorganization plan, their shares are usually subject to substantial dilution. So don't expect much on this score, either.

If the company does come out of bankruptcy, there may be two different types of common stock, with different ticker symbols, listed for the same company. One is the old common stock (the stock that was on the market when the company went kaput), which will trade on the Pink Sheets or over the counter with a five-letter symbol ending in "Q".

The second is the new common stock that the company issued as part of its reorganization plan. If you are betting on the company to rise from the ashes, this is the one you want, so make sure you place your order correctly.

I own a few stocks that have not participated in the recent market rally. I'm pretty sure they are good companies and good stocks. Should I be concerned? -- T.B.

Hey, it's hard not to be concerned when your stocks don't rally along with the rest of a bull market. It's kind of like going to a casino and watching everybody else have a great time as they rake in the chips, while you just sit there breaking even.

But unlike betting in a casino, where the longer you stay at the tables the more likely you are to lose your cash, investing in good stocks for the long term will more often than not pay off handsomely.