What is Dividend?

What is Dividend?

Dividends: A Key Corporate Action

Dividends are payments made by a corporation to its shareholders, usually from profits or reserves. They are a way for companies to share a portion of their earnings with investors.

Types of Dividends

1. Cash Dividends

  • Most common type

  • Paid in cash to shareholders

  • Deposited into brokerage accounts or sent as checks

  • Taxable in most jurisdictions

2. Stock Dividends

  • Paid in the form of additional shares rather than cash

  • Increases the number of shares held, but the total value remains roughly the same

  • Not always taxed immediately (depends on local laws)

3. Property Dividends

  • Paid in assets other than cash or stock (e.g., products, physical assets)

  • Rare

4. Special Dividends

  • One-time payouts that are larger than regular dividends

  • Often occur after exceptionally strong earnings, asset sales, or tax windfalls

5. Interim and Final Dividends

  • Interim: Declared and paid before a company’s annual general meeting (AGM)

  • Final: Declared at the AGM, based on full-year earnings

Key Dividend Dates

Date

Description

Declaration Date

The company announces the dividend and its amount.

Ex-Dividend Date

First day the stock trades without the dividend. Buyers on or after this date don’t receive the dividend.

Record Date

Company checks its records to see who qualifies for the dividend.

Payment Date

The dividend is actually paid out.


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