Dividend is a distribution of a part of company’s net income to its shareholders. Usually it is made in form of cash, but it also could be in form of stocks, property and other.
Dividend often expressed as dividend per share, that is total amount of cash that each share receives.
Dividend is a form of investment income, so it is usually taxable.
One should note three most important dividend dates: declaration date, ex-dividend date, payment date.
Declaration date is the date when company’s Board of Directors declares its intention to pay dividend.
Ex-dividend date is the date when stocks that are bought or sold lose their connection with the right to get the most recent dividend. This means that even if stockholder sells his share after ex-dividend date he will receive the most recent dividend nevertheless.
Payment date is the date when shareholders of a company will receive dividend to their brokerage accounts.
Companies usually pay dividend quarterly, thus one needs to sum dividend per share that were paid during last 12 month to get yearly dividend per share.
Not all companies pay dividend. That is especially true for young companies. Their shareholders should expect return on their investments in form of share price growth rather than dividend.
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