Dividends & Dividend Policy

Information Content of Dividends Theory

This theory asserts that we can assume companies that offer high dividends are strong. These companies can be considered good investments.

Cash Dividend: Payment Schedule

Dividends of this kind are usually paid out annually or on a quarterly basis.

Stock Split: Company Ownership

While the individual worth of stocks is decreased with this process, investors maintain the same level of ownership in the company, as the number of stocks they hold increases.

Stock Split: 3-for-1

With this kind of stock split, you will triple the amount of stocks you hold. The individual worth of each stock drops while the total value stays the same.

Dividend in Kind

With this kind of dividend, a company provides products or physical goods for a dividend, instead of money or stocks.

Low Dividends: Benefits

This kind of dividend may be desired by investors who have high levels of income, since they may help lower the investor's taxes.

Cum-Dividend Date

This represents the final date that you can buy stock and qualify to receive a dividend from the company.

Cash Dividend

Businesses offer this kind of dividend as cash, usually by means of a bank transfer or through a check. This is how dividends are most commonly offered.

Clientele Effect

A concept that tells us that investors will choose to invest their money in companies that offer the kinds of dividends they want.

Date of Record

On this day, an organization must record all the people who will get a dividend. They must also record what amount all the shareholders are owed.

Stock Repurchase

A process that occurs if a company decides to re-purchase its stock shares. Companies may do this if they think their stock is undervalued.

Stock Split

A process that allows businesses to lower the price per share of their stocks by making each stock worth less. This can raise the level of investor interest in stocks.

Dividend

A term used when talking about a payment made by a company to shareholders in the company. The payment comes from profits earned by the organization and is based on how many shares you own.

Stock Dividend

You will receive newly created stock shares if you get this kind of dividend. For example, if you have 10 stocks with a dividend of 1/10, you'll get one extra stock for your dividend.

Declaration Date

The day when a company declares publically that they're going to offer dividends.

Ex-Dividend Date

This day directly follows the cum-dividend date. Once this day occurs, the dividend will go to the person who sold the stock, not the stock's purchaser.