Dividend is defined as a portion of the earnings of a company within a specified duration of time. It is paid out to the shareholders as determined by the board of directors. They may be in the form of shares of stock, property or cash. Such bonuses may be issued as one-off special payout amounts or as continuous payments as the value of the company continues to increase. There are different types of dividend payments that exist.
There are several ways in which the profit made by a corporation can be handled. One way is to give it back to shareholders in part or in its entirety as bonuses. The profit may be ploughed back and form part of the operating capital. In this case, it will be referred to as retained earnings. Some companies use this profit to buy back their own shares within the open market (buyback shares).
The dividend rate (the allocation for each owner or shareholder) can be quoted using one of two methods. The first is what is referred to as dividends per share (or simply, DPS). Here the payment is quoted in terms of dollars for each share held. The second method is known as the yield. In this approach, the payout is quoted as a percentage of the prevailing market price.
The commonest type of bonus is the cash payment. As the name suggest, the bonus in this case is paid out in monetary terms. The payment is determined and declared in the date of declaration. It is assigned to the shareholders on what is referred to as the date of record. It is received on the date of payment. The amount of money that each shareholder receives corresponds to the number of shares that they hold.
Stock dividends are another common type of bonuses that are issued to shareholders. They are the preferred mode of payout when a company is short of operating capital but still wants to keep its investors happy. Each shareholder receives additional shares that are proportional to their preexisting shareholding. The proportional of shares issued should be less than 25% of outstanding shares for this to be true. If the value is more the transaction will be referred to as a stock split.
Property dividend is issued in terms of assets that are held by the company. Such assets may include equipment, inventory, vehicles, real estate properties and so on. When the bonus is paid out to the shareholders the corporation restates the fair market value of the distributed asset. In most cases this value differs from the existing book value. Consequently, the property will carry a net gain or loss.
When a company does not have enough funds to give as bonuses in the near future, the shareholders receive what is referred to as a script payment. This works more or less as a promissory note meaning that they will be paid at a later date as soon as the funds for the same are available. Another way of looking at scrip dividend is that it is equivalent to new shares created by the company.
There are situations that require shareholders receive their share of operating capital. One such situation is when the company is to be wound up. The payment that is given out in such a case is known as the liquidating dividend.
There are several ways in which the profit made by a corporation can be handled. One way is to give it back to shareholders in part or in its entirety as bonuses. The profit may be ploughed back and form part of the operating capital. In this case, it will be referred to as retained earnings. Some companies use this profit to buy back their own shares within the open market (buyback shares).
The dividend rate (the allocation for each owner or shareholder) can be quoted using one of two methods. The first is what is referred to as dividends per share (or simply, DPS). Here the payment is quoted in terms of dollars for each share held. The second method is known as the yield. In this approach, the payout is quoted as a percentage of the prevailing market price.
The commonest type of bonus is the cash payment. As the name suggest, the bonus in this case is paid out in monetary terms. The payment is determined and declared in the date of declaration. It is assigned to the shareholders on what is referred to as the date of record. It is received on the date of payment. The amount of money that each shareholder receives corresponds to the number of shares that they hold.
Stock dividends are another common type of bonuses that are issued to shareholders. They are the preferred mode of payout when a company is short of operating capital but still wants to keep its investors happy. Each shareholder receives additional shares that are proportional to their preexisting shareholding. The proportional of shares issued should be less than 25% of outstanding shares for this to be true. If the value is more the transaction will be referred to as a stock split.
Property dividend is issued in terms of assets that are held by the company. Such assets may include equipment, inventory, vehicles, real estate properties and so on. When the bonus is paid out to the shareholders the corporation restates the fair market value of the distributed asset. In most cases this value differs from the existing book value. Consequently, the property will carry a net gain or loss.
When a company does not have enough funds to give as bonuses in the near future, the shareholders receive what is referred to as a script payment. This works more or less as a promissory note meaning that they will be paid at a later date as soon as the funds for the same are available. Another way of looking at scrip dividend is that it is equivalent to new shares created by the company.
There are situations that require shareholders receive their share of operating capital. One such situation is when the company is to be wound up. The payment that is given out in such a case is known as the liquidating dividend.
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