DIVIDENDS

INTRODUCTION
Payments made by a corporation to its
shareholder members.
Share of a company's profit
that it decides to pay to its shareholders.
Provides an incentive to invest in their shares.

COMPANIES DIVIDEND POLICIES

Dividends gradually increase as a percentage of
profit.
The level of dividend depends on it.

FOR JOINT STOCK COMPANY

A dividend is allocated as a fixed amount per
share.
Paying dividends is not an expense; rather, it is
the division of an asset among shareholders.
Public companies usually pay dividends on a
fixed schedule, but may declare a dividend at any
time, sometimes called a special dividend to
distinguish it from a regular one.

FOR COOPERATIVES

Allocate dividends according to members'

activity, so their dividends are often considered
to be a pre-tax expense.

PAYMENT OF DIVIDENDS
Dividends are usually paid after the half-year
and full-year financial results, although some
companies pay quarterly.
Upon the decision of BODs.

DISTRIBUTION OF CASH TO
SHAREHOLDERS
May also be distributed in the form of stock
(stock dividends), or property (typically
commodities or goods from inventory).
By law(Impairment Of Capital Rule), dividends
must be paid from profits; dividends may not be
paid from a corporation's capital.

JOINT STOCK COMPANY DIVIDENDS

Cash Dividends (Pays Cash in the form of
cheque).
Stock Dividends (Paid in the form of additional
stock shares).
Property Dividends (Paid in the form of assets
from issuing corporations).

TYPES OF COOPERATIVES
Consumers' Cooperatives.
Producer Cooperatives, e.g. worker cooperatives,
allocate dividends according to their members'
contribution, such as the hours they worked or
their salary.

OTHER CORPORATE DIVIDENDS

Trust.
Mutual.
In the case of mutual insurance, for example, in
the United States, a distribution of profits to
holders of participating life policies is called a
dividend.

PAYMENT PROCEDURES
Date.
Declaration Date.
In-dividend Date.
Ex-dividend Date.
Record Date.
Payment Date.

DATE
Date Of Record-(All shareholders on the date of
record are entitled to receive the dividend).
Declaration Date-(Day the Board of Directors
announces its intention to pay a dividend. A
liability is created and the company records that
liability on its books; it now owes the money to
the stockholders.

In-dividend Date-(last day, which is one trading

day before the ex-dividend date)
Existing holders of the stock and anyone who
buys it on this day will receive the dividend,
whereas any holders selling the stock lose their
right to the dividend.

Ex-dividend Date
The ex-dividend date is the day on which all
shares bought and sold no longer come attached
with the right to be paid the most recently
declared dividend.
Existing holders of the stock will receive the
dividend even if they now sell the stock, whereas
anyone who now buys the stock will not receive
the dividend.

RECORD DATE
All shareholders on the date of record are
entitled to receive the dividend.
Shareholders who properly registered their
ownership on or before the date of record will
receive the dividend. Shareholders who are not
registered as of this date will not receive the
dividend.

PAYMENT DATE

The payment date is the day when the dividend

cheques will actually be mailed to the
shareholders of a company or credited to
brokerage accounts.

WHY A FIRM NEEDS TO PAY

DIVIDENDS
A corporation needs to pay dividends to attract
the customers or mostly known as investors.
To show the credibility of the company. More the
dividends of the company, stronger will be the
reports of the company.

DIVIDEND REINVESTMENT PLANS

These plans allow shareholders to use dividends
to systematically buy small amounts of stock,
usually with no commission and sometimes at a
slight discount.
Reinvestment of dividend increases the leverage
or power of the company because company uses
this dividend to work more efficiently and earn
more profit.