What is Dividend ?
Stock Dividends?
All the early Investors will someday come across this question, What is Dividend and why do we receive Dividends? and a lot many questions around these.
Dividends are paid by the company to its shareholders in different payout cycles. Dividends are paid mainly by cash payouts, yet some companies prefer to give stock dividends mainly in the form of stock splits.
Let me explain you in details -
Cash dividends are paid by companies on monthly, quarterly, half-yearly and annual basis. The cycle and dividend payout percentage are totally decided by the company management and their Internal teams. Every company doesn't pay the dividend and it is possible that a company may opt out from dividends at a given point in time.
Why companies pay Dividends?
Companies sell shares to the public to raise money, which they then use to fund existing operations and for expansion of their businesses. In lame terms, you can say dividend is a reward given to shareholders for owning stock in the corporation. Dividends are the best way for companies to attract investors to buy their stock.
Are Companies bound to pay Dividends?
The answer is "No", no company is legally liable to pay dividends unless the board approves to pay dividends to their shareholders.
How Dividends are Paid?
The Dividends are paid per share basis and it will be automatically credited to your Demat Linked Bank Account in case of cash dividends, In case of stock dividends, the shares are automatically allocated to your demat account and the number of shares will automatically be updated.
However, if an investor buys shares directly from a company itself (through a direct investment plan like a DRIP, for example), then the dividends can be automatically reinvested to buy more shares. Investors also have an option to ask the company to mail the dividend checks to the Investor registered address.
What if you sold shares before the Dividends are announced?
In this case, you will not get the allocated dividends and you will be paid only if you are holding shares on the Date of Dividend announcement by the company.
Let me list down some of the Highest Dividend Paying Stocks below, some of these are not only paying good dividends but also one of the reliable and safe heavens to Invest your money in a longer journey.
Dividends are paid by the company to its shareholders in different payout cycles. Dividends are paid mainly by cash payouts, yet some companies prefer to give stock dividends mainly in the form of stock splits.
Let me explain you in details -
Cash dividends are paid by companies on monthly, quarterly, half-yearly and annual basis. The cycle and dividend payout percentage are totally decided by the company management and their Internal teams. Every company doesn't pay the dividend and it is possible that a company may opt out from dividends at a given point in time.
Why companies pay Dividends?
Companies sell shares to the public to raise money, which they then use to fund existing operations and for expansion of their businesses. In lame terms, you can say dividend is a reward given to shareholders for owning stock in the corporation. Dividends are the best way for companies to attract investors to buy their stock.
Are Companies bound to pay Dividends?
The answer is "No", no company is legally liable to pay dividends unless the board approves to pay dividends to their shareholders.
How Dividends are Paid?
The Dividends are paid per share basis and it will be automatically credited to your Demat Linked Bank Account in case of cash dividends, In case of stock dividends, the shares are automatically allocated to your demat account and the number of shares will automatically be updated.
However, if an investor buys shares directly from a company itself (through a direct investment plan like a DRIP, for example), then the dividends can be automatically reinvested to buy more shares. Investors also have an option to ask the company to mail the dividend checks to the Investor registered address.
What if you sold shares before the Dividends are announced?
In this case, you will not get the allocated dividends and you will be paid only if you are holding shares on the Date of Dividend announcement by the company.
Let me list down some of the Highest Dividend Paying Stocks below, some of these are not only paying good dividends but also one of the reliable and safe heavens to Invest your money in a longer journey.
- Rural Electrification Corporations (REC)
- NMDC
- ONGC
- Zota Healthcare
- NTPC
- Hindustan Unilever Limited (HUL)
If you would like to see whether a company is paying dividends and how much then you can search on the company website financial reports or comment in the comment section, I will share you the details.
You can Invest some money and keep earning in form of Dividends, these are kind of idle income sources. Addition to the Dividend Income you will also gain some capital with growth in share price.
I hope your queries related to the dividends are addressed, If you still have some questions then please mention in comments and I will be happy to come up with answers.
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