Dividend

DIVIDEND TYPES

• Cash. 

This is the payment of actual cash from the company directly to the shareholders and is the most common type of payment. 

• Stock. 

Stock dividends are paid out to shareholders by issuing new shares in the company. These are paid out pro-rata, based on the number of shares the investor already owns.

• Assets. 

A company may also pay out other assets such as investment securities, physical assets, and real estate, although this is not a common practice.

• Special. 

A special dividend is one that’s paid outside of a company’s regular policy . It is usually the result of having excess cash on hand for one reason or another.

• Common. 

This refers to the class of shareholders (i.e., common shareholders), not what’s actually being received as payment.

• Preferred. 

This also refers to the class of shareholders receiving the payment.

• Others. 

Other, less common, types of financial assets can be paid out as dividends, such as options, warrants, shares in a new spin-out company, etc

FEW BASIC TERMS YOU NEED TO KNOW

• Dividend Yield. 

This is the annual dividend per share divided by the share price. 

• Record Date. 

The date a company will check and record information about who is eligible to receive a dividend payout.

• Ex-Dividend Date. 

This is essentially a cut-off date. In other words, if you buy shares on or after this date, you won’t get the next dividend the company is scheduled to pay. 

• Declaration Date. 

This is the day that a company’s board of directors formally announces an upcoming dividend payment. 

• Payment Date. 

The day on which companies will send checks to shareholders or credit to their brokerage accounts.