What are dividends? - Dividends are a portion of the profits or reserves paid by the company to its shareholders.
- ELIGIBILITY: A shareholder must hold the stocks in their demat before the ex-date or on the record date to be eligible for a dividend.
- For example, if Mr. A has 1000 shares of XYZ Co. on record date and the company is providing ₹2 dividend per share, then Mr. A's dividend will be 1000 x 2 = ₹2000.
How can I be eligible for dividends? - To be eligible for dividends, you need to own company shares before the expiration date(ex-date).
What is an interim and final dividend? - An interim dividend is the dividend that is paid before the company’s financial year ends, i.e., in between.
- A final dividend is a dividend that is paid after the company’s financial ends.
- Interim dividends are usually smaller in amount compared to final dividends.
How many types of dividends are there? - There are two main types of Dividends :
- Cash: Here, the dividend amount is settled in cash.
- Stock: Here, stocks equal to the value of the dividend are further issued to the eligible shareholders in the form of bonus shares.
RELATED FACTS:- - Dividends can be paid out in cash, by cheque or electronic transfer, or in stock.
- Cash dividends provide investors with income but come with tax consequences. Cash dividends causes the company’s share price to drop.
- Stock dividends or bonus shares are usually not taxed. It Increases the shareholders stake in the company and provides the investor a choice to keep or sell the shares.
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