More about Dividends..
February 17, 08 by FinanceTurfDividends are payments made by a company to its shareholders.
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When a company earns a profit, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders of the company as a dividend.
Paying dividends is not an expense; rather, it is the division of an asset among shareholders.
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There are various forms in which the dividends can be paid, some of which are :-
• Cash
Cash dividends (most common) are those paid out in form of cheques. This is the most common method of sharing corporate profits with the shareholders of the company.
• Stock
Stock dividends are those paid out in form of additional stock shares of the issuing corporation, or other corporation. They are usually issued in proportion to shares owned.
• Property
Property dividends or dividends in ‘in kind’ are those paid out in form of assets from the issuing corporation or another corporation. They are relatively rare and most frequently are securities of other companies owned by the issuer.
• Other
Dividends can be used in structured finance. Financial assets with a known market value can be distributed as dividends.
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