What is the dividend?

What is the dividend?

A dividend is a payment made by a company to its shareholders, typically as a portion of its profits. Dividends are one way companies reward their investors.

You will be eligible for dividends If you’ve purchased the stocks before the ex-date. If you've purchased the shares on or after the ex-date, you will not be eligible for the dividend.

Types of Dividends:

Cash Dividends: The most common type, where shareholders receive a cash payment per share owned.

Stock Dividends: Instead of cash, companies issue additional shares to shareholders. This increases the number of shares each investor holds.

Interim and Final Dividends: Interim dividends are paid during the year, while final dividends are paid at the end of the financial year.

Example: If ABC Ltd declares a dividend of Rs.5/share and the market value of the share is Rs.250 then:

Dividend Yield = Full-year Dividend/Current Share Price

In this case it is: 5/250 = 0.02 or 2%

    • Related Articles

    • 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 ...

    • What is Cash or Stock Dividend Choice?

      A Cash or Stock Dividend Choice (also called a dividend reinvestment option or dividend election) lets shareholders decide whether to receive their dividends as: Cash payments, or Additional shares of stock (stock dividend or reinvested dividend) ? ...

    • Will I get my dividend in the bank account or trading account?

      You will get your dividend in your bank account which is linked to your Demat account.

    • What are bonus shares?

      Bonus shares are the additional shares that a company gives to its existing shareholders on the basis of shares owned by them. Bonus shares are issued to the shareholders without any additional cost. Bonus shares are issued by a company when it is ...

    • What are the Types of Corporate Actions?

      Types of Corporate Actions: 1. Mandatory Corporate Actions These actions are carried out by the company and affect all shareholders. Shareholders don’t need to take any action. Dividends – Cash or stock payments made to shareholders. Stock Splits – ...