Categorizing Dividends According To Types
9176
Finance > Stocks Mutual Funds
Mar 1, 2007
David Gass
Categorizing Dividends According To Types
Dividends are a portion of the company?s earnings to be distributed to its shareholders, based on the board of directors? decision. Dividends are quoted as Dividend Per Share (DPS) or dividend yield. Most companies having stable and secure growth offer dividends when their share prices become stagnant. However several companies do not offer dividends since all their profits are reinvested to ensure faster, better-than-average growth. The board of directors decides the percentage of the profit to be distributed as dividends. Dividends are issued quarterly or annually, and companies are not under any obligation to pay dividends every quarter and the company may stop paying dividends at any point in time. But if the company stops paying dividends its market value is affected. Hence a reason why dividends are usually paid regularly and even if there is no increase in the dividend at least they will get dividends on a fairly regular basis. The board of directors declare dividends each time they are paid. There are three important dividend-related dates: declaration date, date of record and payment date. On the declaration date the company opens a book of liabilities in terms of the cash dividends it owes to the shareholders, and on this date both the other dates are decided and declared. Date of record indicates the dividends paid only to shareholders who are the owners of the share on or before the date of record. Payment date is the date the dividend is paid out.
Types Of Dividends
Companies offer three regular kinds of dividends as well as special forms of dividends
1.Cash Dividends:
This is the most common and popular method of sharing a company?s profits. The company pays portion of profits to shareholders as dollar per share. However cash dividends are subject to double taxation in the US. This is a reason used by many companies to justify not paying dividends. The government taxes at a maximum rate of 15%. The company distributes dividends after the company has paid income tax and the government taxes the shareholders once they receive the dividends.
2.Stock Dividends:
Companies pay stock dividends in the form of additional shares of the same company or its subsidiary corporation according to the proportion of the shares owned.
3.Property Dividends:
Companies pay property dividends in the form of products or services provided by the corporation. These take the form of assets such as gold, silver, cocoa beans etc. distributed by companies.
4.Special Dividends:
Companies offer special dividends rarely, such as when the company wins litigation and when the company sells a business or liquidation of investments. Some companies also offer special dividends when they have high amount of excess cash, in order to boost the market value of their stocks. Sometimes they document these special dividends as return of capital, meaning the company is returning a portion of the money invested by the shareholders. They call these dividends capital dividends, and these dividends are tax-free.
Reinvested Dividends
Shareholders can reinvest dividends received partially or totally in the company?s stock if the shareholder does not depend on the dividends to make ends meet. Shareholders accumulate wealth consistently this way and enrolling in a dividend reinvestment plan can make the whole process of reinvesting easier since everything is automated, thanks to the various types of software that have commendable features, making everything concerned with dividends just a mouse click away. From the convenience of your home you can find out the latest statistics about dividends and reinvestment options.
Types Of Dividends
Companies offer three regular kinds of dividends as well as special forms of dividends
1.Cash Dividends:
This is the most common and popular method of sharing a company?s profits. The company pays portion of profits to shareholders as dollar per share. However cash dividends are subject to double taxation in the US. This is a reason used by many companies to justify not paying dividends. The government taxes at a maximum rate of 15%. The company distributes dividends after the company has paid income tax and the government taxes the shareholders once they receive the dividends.
2.Stock Dividends:
Companies pay stock dividends in the form of additional shares of the same company or its subsidiary corporation according to the proportion of the shares owned.
3.Property Dividends:
Companies pay property dividends in the form of products or services provided by the corporation. These take the form of assets such as gold, silver, cocoa beans etc. distributed by companies.
4.Special Dividends:
Companies offer special dividends rarely, such as when the company wins litigation and when the company sells a business or liquidation of investments. Some companies also offer special dividends when they have high amount of excess cash, in order to boost the market value of their stocks. Sometimes they document these special dividends as return of capital, meaning the company is returning a portion of the money invested by the shareholders. They call these dividends capital dividends, and these dividends are tax-free.
Reinvested Dividends
Shareholders can reinvest dividends received partially or totally in the company?s stock if the shareholder does not depend on the dividends to make ends meet. Shareholders accumulate wealth consistently this way and enrolling in a dividend reinvestment plan can make the whole process of reinvesting easier since everything is automated, thanks to the various types of software that have commendable features, making everything concerned with dividends just a mouse click away. From the convenience of your home you can find out the latest statistics about dividends and reinvestment options.
Content Provider: http://www.traffichelp4u.com
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site www.smallbusinessconsulting.com
Write a Review
Add to My Favorite
Refer it to Friend
Report Article
Other links owned by this user
Corporate credit i one of the thing that help make the buine world go round. It allow the free exchange of good and ervice without having to wait until the money i actually in the bank in order to deliver or receive the good and ervice of
Category:
When a company is unable to service its debt and make payments to its creditors, it may file for bankruptcy protection with a federal bankruptcy court by itself or be forced to by its creditors under Chapter 11 of the United States Bankruptcy Code. This
Category:
Diviens are a portion of the company?s earnings to be istribute to its shareholers, base on the boar of irectors? ecision. Diviens are quote as Divien Per Share (DPS) or ivien yiel. Most companies having stable an secure growth offer
Category:
Corporate actions affect rights and privileges of shareholders to a great extent. Shareholders are of two kinds, common shareholders and preferred shareholders. Companies do offer all ir shareholders voting rights if agreed upon by
Category:
Bookkeeping is fundamental in running your business in an informed way. It is important that you have an organized, transparent and updated bookkeeping system in place. One of the ways to keep track of your company?s books is bank
Category:
Plnning is n importnt element of ny business venture. It cn encompss nlysis, development of gols, nd strtegies. Assessment of vrious prmeters in the pln llows you to utilize the resources t the optimum level. You cn judge fctors such
Category:
Snce Edward Bellamy ntated the concept of a credt card n the 1920s, we?ve taken gant strdes n the development and modernzaton of ths noton. From the pasteboard cards to the ultra-modern plastc cards, they contnue to be more sophstcated
Category:
Mergers, acquisitions and spin-offs are part of the corporate restructuring strategy in which big and small companies indulge in today?s corporate world. These are also called consolidation activities. Companies pursue consolidation activities to
Category:
After you design your website, obtain a domain name, and list it on the search engines, you should focus on developing the traffic. There are several ways in which you can target traffic to drive it to your website. Affiliate
Category:
Mos e-commerce sies are auomaically a par of he web, bu here are several ways o make hem dynamic in order for he search engines o crawl across hem. Dynamic design can ge your e-commerce sie high ranking and bring is conen o he firs
Category:
To ensure that the businesses are authentic and are discharging their social responsibilities, every government sets up rules and regulations at local, state, and federal levels. This article pertains to the businesses and government regulations in the
Category:
The governmen reas corporaions as separae eniies ha can buy, sell and lease properies, ener ino conracs, sue and be sued. Specifically, here are many advanages of incorporaing in Delaware. People form corporaions o enjoy he benefis
Category:
It is quite simple bringing traffic to your website when you understand the appropriate strategies. The two most popular and cheap inter-net marketing strategies are pay-per-click (PPC) search engines and Affiliate Programs. These strategies can bring
Category:
A personal guarantee is when an individual agrees to be held responsible for assuming the debts of another person or business in the case of the borrower failing to pay back monies borrowed or defaulting on a loan or mortgage. This provides back up
Category:
Insider trading is the trading of a company?s shares by people who work for the company, such as senior level executives, directors and those who own more than 10% of the total shares. Insider trading is illegal since the trading is based on some
Category:
To improve your website's search engine ranking, you must plan its optimization strategy wisely. You achieve this by feeding the search engines properly. Learn the methods that these search engines use for the purpose of ranking the web pages. This
Category:
An initial public offering (IPO) is the initial sale of the common shares of a company or corporation to public investors. A corporation issues an IPO to raise capital. IPOs come with a host of compliance regulations and other legal requirements. The
Category:
Starting a business venture is a dream of many usually due to misconceptions about not adhering to strict time constraints and not answering to a boss. However, not everyone can go through all the complexities of starting a business and it usually
Category:
A corporate action can be defined as a decision undertaken by the mutual consent of the board of directors of a company. A corporate action creates a direct impact on everyone involved in the company including the shareholders and the bondholders.
Category:
Choosing a stock while making an investment decision depends upon your financial goals. Corporations issue different types of stocks, the basic two types being common stock and preferred stock. Another type of classification, commonly used is to
Category:
Other links at Finance > Stocks Mutual Funds
Diviens are a portion of the company?s earnings to be istribute to its shareholers, base on the boar of irectors? ecision. Diviens are quote as Divien Per Share (DPS) or ivien yiel. Most companies having stable an secure growth offer
Category:
A mutual fund (called 'unit trust' in Asia) is an investment vehicle that pools money from many individual investors. A professional fund manager invests and manages these funds into stocks, bonds and other securities.
Category:
Many new over zealous investors will tie up almost all their liquid assets into their stock portfolios, leaving little money for those unexpected costs of life like car repairs, doctors bill, or an increase in property taxes. When an investor over
Category:
A deep vein thrombosis is a blood clot developing in a deep vein, usually in the leg. They also can occur in other parts of the body. Blood clots in the veins in the thigh are usually more serious than blood clots that happen in veins in your lower leg.
Category:
Site Sponsor
Directory Statistics
Articles: 68222
Categories: 501
Yahoo Entertainment
