What Is a Dividendor

What Is a Dividendor

What Is a Dividend

Dividends are payments made by a corporation to a shareholder. The amount of dividend received depends on the size of the investor’s holding. New Paltz Investors, Inc. is a company that pays a dividend to its shareholders.


A dividend is a token reward paid to the shareholders for their investment in a company’s equity, and it usually originates from the company's net profits. While the major portion of the profits is kept within the company as retained earnings—which represent the money to be used for the company’s ongoing and future business activities—the remainder can be allocated to the shareholders as a dividend. At times, companies may still make dividend payments even when they don’t make suitable profits. They may do so to maintain their established track record of making regular dividend payments.

Due to the NAV-based working of funds, regular and high-frequency dividend payments should not be misunderstood as a stellar performance by the fund. For example, a bond-investing fund may pay monthly dividends as it receives money in the form of monthly interest on its interest-bearing holdings. The fund is merely transferring the income from the interest fully or partially to the fund investors. (Source: www.investopedia.com)


Tax is another important consideration when investing for dividend gains. Investors in high tax brackets are observed to prefer dividend-paying stocks if the jurisdiction allows zero or comparatively lower tax on dividends than the normal rates. For example, Greece and Slovakia have a lower tax on dividend income for shareholders, while dividend gains are tax-exempt in Hong Kong.

A dividend is a share of profits and retained earningsRetained EarningsThe Retained Earnings formula represents all accumulated net income netted by all dividends paid to shareholders. Retained Earnings are part that a company pays out to its shareholders. When a company generates a profit and accumulates retained earnings, those earnings can be either reinvested in the business or paid out to shareholders as a dividend. The annual dividend per share divided by the share price is the dividend yieldDividend Yield FormulaThe Dividend Yield is a financial ratio that measures the annual value of dividends received relative to the market value per share of a security. It calculates the percentage of a company’s market price of a share that is paid to shareholders in the form of dividends.. See examples, how to calculate. (Source: corporatefinanceinstitute.com)


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