Friday, January 8, 2016

The 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.

Now the first and most common kind would be cash dividends which are often given to those with common shares. Now if the directors of a company would want to give out cash dividends, they would first declare that they will be giving these bonuses and how much. After that, there will also be a date of payment which will be the date that the investor will actually receive it.

Another kind would be stock dividends which are the types that are not in the form of cash but in the form of shares of stock. Just like the cash dividends, there would be a declaration date as well as a date of payment wherein one would get his dividends. Now one very important thing to take note would be that only those who have common shares may avail of stock dividends.

Now to further illustrate, it would be best to take a look at an example. For instance a certain company X is a public listed company and a person has invested in it. He will be getting stock dividends of twenty five percent which is basically the amount of shares he will receive as dividends based on his principal investment.

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.

Now there would also be the scrip dividends. Now these are usually given as IOUs in the event that the company has insufficient funds or money at hand. So the company would issue a promissory note to the investor on when the company will pay.

The last kind would be liquidating dividends which is wherein the board would return the principal amount invested by a shareholder in the form of dividends. This would usually happen if the business is already ready to close down and would still want to keep good ties with its investors. It is called liquidating dividends because the business is already in the process of liquidation.

So basically, these are the different kinds of dividends that one may avail of. Now if one would want to go deeper into this subject, he may actually go for a seminar on it. Many organizations, especially in Florida, would actually offer these seminars.




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