The dividend is a part of the company's NET PROFIT (net profit) given by a company to its shareholders. The NET PROFIT (net profit) survived after tax and all other types of ADJUSTMENT, which is the benefit to the company, is equally distributed in the company's shareholder, and the person holding the shares In the same proportion, the benefit of dividends is obtained.
If I have 100 shares of TCS, on which TCS has given a dividend of Rs 5 per share, this means I will get the total dividend: 100 x 5 = 500 rupees.
DECISION TO GIVE DIVIDEND:
It is a matter of note that whether or not to give dividends, it depends entirely on the company's board of directors, if the Board of Directors wishes, then the company announces dividends. The dividend is decided by the Board of Directors in the Annual General Meeting (AGM) of the company. The point of note is that most companies who are new to the market, or who run on this policy, will make the business more profitable by putting them back into business, such a company gives very little dividend or not is.
CALCULATION OF DIVIDEND:
Keep in mind that dividend is always given at the stock's FACE VALUE, and its calculation is also done on FACE VALUE,
Like the current market price of a stock - 500 rupees,But if the face value of that stock is Rs 10, and the company decides to give a 100% dividend, So it means the face value of the stock is 10 rupees, then 100% dividend means that a dividend of 10 rupees per share will be available, Keep in mind that there is nothing to do with the current MARKET PRICE of dividends.
DIVIDEND in which ACCOUNT is given to the investor:
The dividend is CREDIT in that bank account, which is LINKED in our DEMAT ACCOUNT, which holds shareholdings.
Like if my ICICI Bank account is linked with DEMAT ACCOUNT, and in my DEMAT ACCOUNT, the share of TCS is creditworthy, And if the company announces the dividend given by TCS, then I will be credited with dividends directly into the account of my ICICI Bank,
TYPES OF DIVIDEND :
INTERIM DIVIDEND - When the company announces the quarterly dividend within the financial year, it is called INTERIM DIVIDEND,
FINAL DIVIDEND - Final Dividend means a dividend which the company announces after the financial statement for the fiscal year has been reported in the company’s, it is called FINAL DIVIDEND.
BENEFITS OF A STABLE DIVIDEND POLICY:
Confidence among Shareholders - By getting regular and permanent dividends, the trust is credited to the shareholders in the minds of the shareholders. Even if the institution does not cut dividends even after the profit is reduced, and the distribution of funds by funds from the planning, then these stocks are good in the capital market. You can also refer to Professional Trader to learn more about trading, stocks tips and financial markets.
Satisfaction among Shareholders - Some are very cautious and aware of a partial income and they give more importance to the benefits they get per year at regular rates. Therefore, shareholders can be satisfied by adopting a regular dividend policy.
Comparative Stability in Market Price of such shares - Depending on the fractional dividends, the market prices have relatively fewer fluctuations and the possibilities of betting in these parts are less.
Increase in credibility (Strengthens Goodwill) - The organization can successfully obtain a loan from the creditworthiness of the institution.
Helpful in Long-Term Planning - Can plan long-term plans for the development of the institution, as financial requirements and means of fulfillment can be assessed under this policy.
Stability in National Income - If most of the Nation's institutions follow the steady dividend policy, then it also brings stability in national income which is an indicator of the sustainability of the entire economy. Therefore, keeping in view the above benefits, skilled and experienced managers always try to ensure that Bikaner adopts a steady dividend policy.
WHAT IS DIVIDEND YIELD?
DIVIDEND YIELD is a Financial RATIO, which shows the ability to earn a dividend of stock, and in this way, the dividend yields the relation between the investor's ability to earn a stock's dividend and the market price of its stock.
Suppose if the INFOSYS company has a stock of FACE VALUE 5, and the market value is 800 rupees per share,And INFOSYS announces 200% dividend,This means that dividends from Infosys will be 200% of the share value of the share = 10 rupees,And if talk of DIVIDEND YIELD, we have to divide the dividend value of the stock by the market value, This wayDividend yield of INFOSYS shares = (10/800) * 100 = .0125 X 100 = 1.25%And thus the dividend yield of INFOSYS will be=1.25%.
THINGS TO TAKE CARE OF DIVIDEND:
1) The dividend is given from the company's AFTER TAX PROFIT.
2) Keep in mind that the dividend is given through profit, and so if the company does not benefit in any year, then the company is in a position not to give dividends, but still, the company will have to pay dividend Can declare giving.
3) If the company is giving a REGULAR DIVIDEND, it means the company is earning a REGULAR profit, and the company is financially strong.
4) There is no legal obligation to give dividends above the company, it is decided to give or not to give dividends with the consent of the board of directors of the company.
5) The dividend is generally given annually, and large companies pay it quarterly too.
6) Dividend income is about 2 to 3 percent or around it annually.