Monday, April 18, 2016

The Five Types Of Dividend Payments

By Joseph Smith


Whenever a person would become a stockholder of a company, depending on what types of stocks he will be possessing, he will be entitled to dividends. Of course there are different kinds of dividends that one may receive based on his agreement with the company. Just to give one an idea, here are several types of dividend payments that he would have to take note of.

Number one on the list would be the most common type which is known as the cash dividend. Now the board of directors would probably want to give rewards to their investors in the form of cash which is known as the cash dividend. Now the two most important things to take note of here is that the basis of the amount is the principal investment and that there are two dates to remember namely the date of declaration and date of payment.

The second kind that one should know about would be the stock dividends which are dividends that are given as shares and not cash. Of course just like the cash type, there would first have to be a declaration date and a payment date. Now one very crucial thing to know about would be that only those whose shares are common shares are entitled to receive these kinds of dividends.

Now just for one to understand how this works, it is best to look into an example of when one would invest in the stock market. For example, if one would invest in company A and company A would declare stock dividends, then he will be receiving shares of stocks. In the declaration, the board decided investors will give twenty five percent which is twenty five percent of the stocks one invested in originally.

Another type would be property dividends which is something that the board may give to investors instead of monetary types. Now when the board would agree to give an investor this type, he will be recording the piece of property at its fair market value. After the date of payment, all rights to this asset will belong to the investor and he will be the one to earn from its appreciation.

The fourth on the list are the scrip dividends. Now in the event that the company does not have that much cash on hand, they may actually offer a promissory note to pay dividends. Basically they are promising that they will pay an investor his dividends but at a later date.

Finally, there would be liquidating dividends which are usually given whenever a company would already be ready to close and the board would still want to end on good terms with the investors. Now basically, the board of directors would be returning the principal amount invested by a shareholder in the form of dividends. This is usually done in the liquidation stage of closing down hence the name of the dividend is liquidating divided.

So for those who are willing to become investors, these are some things to know about. If one would want to have deeper knowledge of each, then it would be recommended that he try going for a seminar. If one would want to go for some really good seminars, then he might want to try visiting the city of Florida since there are many speakers there that specialize in this field.




About the Author:



No comments:

Post a Comment