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Dividends are payments made by a corporation to its shareholder members. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend. Many corporations retain a portion of their earnings and pay the remainder as a dividend. For a joint stock company, a dividend is allocated as a fixed amount per share. Therefore, a shareholder receives a dividend in proportion to their shareholding. For the joint stock company, paying dividends is not an expense; rather, it is the division of an asset among shareholders. Public companies usually pay dividends on a fixed schedule, but may declare a dividend at any time, sometimes called a special dividend to distinguish it from a regular one. Dividends are usually settled on a cash basis, as a payment from the company to the shareholder. They can take other forms, such as store credits (common among retail consumers' cooperatives) and shares in the company (either newly-created shares or existing shares bought in the market.) Further, many public companies offer dividend reinvestment plans, which automatically use the cash dividend to purchase additional shares for the shareholder.
Wiki User
∙ 15y ago
Wiki User
∙ 14y agoThe dividend is the amount of money that u already have made when you buy the stock
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How to calculate cost of preference shares?
Kp (cost of pref. share) = Annual dividend of preference shares Market price of the preference stock
What would cause common stock shares issued to exceed common stock shares outstanding?
declaration of a stock dividend
Relationship between shareholder return and market share price?
Sometimes there is a relationship between shareholder return and the price of a stock. However, it is not real close. People buy a stock on the basis of what they think it will return in the future rather than what it has returned in the past. If a stock keeps slowly increasing its dividend, people generally assume that the company will continue in that direction. Most people would pay a little more for that stock than they would for a preferred stock in the same company that would never increase its dividend. However, if a company decreases its dividend, people take that as a negative sign. A number of people will dump the stock. It can still be a good company but a lot of people will get out. They see a company that is getting into trouble. The stock could fall below what it would be if just the ratio of the last dividend to the price were considered. Some people will buy the stock because they see a stock with a 10% dividend. A number of companies do not pay dividends. Some are startups with special products that a big company might purchase. There is no telling if their product will ever be worth anything. That is strictly a gamble.
A common stock which pays a constant dividend can be valued as if it were?
preferredstock
You expect the dividend to grow steadily at a rate of 4 percent per year. What is the expected stock price three years from now?
The stock price of a growth stock is only fractionally dependent on the dividend. I assume that you are talking about a growth stock since you ask about the future price of the stock. There are many other factors that are far more influential in the price of a stock than the dividend. Some, but not nearly all, are: 1. The earnings, and expected future earnings, of the company and it's market sector. 2. The market capitalization of the stock. This is the number of shares times the price per share. 3. The earnings-per-share. A stock with an 18X earnings-per-share might be overvalued if the average EPS of its direct competitors was 14X. Conversely, if the EPS of its competitors were 22X as an average, the stock might be undervalued. 4. Quality of Management. Confidence in management is an important factor. 5. Company buy-back. If a company is actively buying back its stock there are fewer shares outstanding which could, over time, help the price to rise. Always remember, the stock market is only an auction house. If there are more buyers wanting to own the stock than there are sellers willing to sell, the movement of the stock price will be higher. And, of course, vice versa.
The cost of preferred stock is equal to?
the preferred stock dividend divided by market price
Does stock that pays special dividend always go down by the amount of the dividend?
The ex-dividend date is the day after which all shares bought and sold no longer come attached with the right to be paid the most recently declared dividend. This is an important date for any company that has many stockholders, including those that trade on exchanges, as it makes reconciliation of who is to be paid the dividend easier. Prior to this date, the stock is said to be cum dividend ('with dividend'): existing holders of the stock and anyone who buys it will receive the dividend, whereas any holders selling the stock lose their right to the dividend. On and after this date the stock becomes ex dividend: existing holders of the stock will receive the dividend even if they now sell the stock, whereas anyone who now buys the stock now will not receive the dividend. It is relatively common for a stock's price to decrease on the ex-dividend date by an amount roughly equal to the dividend paid. This reflects the decrease in the company's assets resulting from the declaration of the dividend. However it must be emphasised that there is no direct link between the price and the dividend, this price movement is simply a result of market action. To sum up the date a dividend is paid is not the date a stock usually goes down but rather the date that the stock purchase no longer includes the dividend. This in no way is a guarentee a stock could be up considerably that day based on market conditions and a number of other things even with the downward pressure of no longer being able to receive that dividend.
How do you calculate ex-stock dividend price?
Ex-stock dividend is equal to the price of the dividend of the stock, the only difference is the face that the dividend is actually paid to the seller rather then the buyer of the stock.
What is the best dividend stock to own right now?
I would like to recommend you to drive thru with highest yield dividend stocks with good potential in the market.
How can one calculate whether a company is undervalued or Overvalued in the stock market?
This can be calculated through Q ratio and dividend discount model. The divident discount model is not appropriate for the companies who are issuing any dividend. So the Q ratio is Value of the stock= total market value of the stock/ total value of assets If the value is from 0 to 1 then the stock is undervalued but if the value is above 1 then the stock is overvalued. Ahsan Jamil
What is ex dividend rate?
The ex-dividend date (typically 2 trading days before the record date for U.S. securities) is the day on which all shares bought and sold no longer come attached with the right to be paid the most recently declared dividend. This is an important date for any company that has many stockholders, including those that trade on exchanges, as it makes reconciliation of who is to be paid the dividend easier. Existing holders of the stock will receive the dividend even if they now sell the stock, whereas anyone who now buys the stock will not receive the dividend. It is relatively common for a stock's price to decrease on the ex-dividend date by an amount roughly equal to the dividend paid. This reflects the decrease in the company's assets resulting from the declaration of the dividend. The company does not take any explicit action to adjust its stock price; in an efficient market, buyers and sellers will automatically price this in.
If an investor buys stock on the ex-dividend date will that individual receive the dividend?
No, the definition of ex-dividend date is trading without the dividend. Any stock purchased "ex-dividend" date is not entitled to the dividend. AND equally as importantly OFFSETTING this - is the insatnt that happens the stock price is reduced by the amiunt of the dividend being paid. NO you cannot "steal" a dividend - that is buy it the day before the divideden gets paid (or ownership date actually) - and sell the day after - all you do is get the dividend and the equally lower stock value.
If you sell a stock on the ex dividend date do you still get the dividend?
yes!
What has the higher return preferred stock or common stock?
Dividend on common stock has to be more than dividend on preferred stock because of higher risk involved in equity investments.
Where can I find online information about dividend investor?
Leading dividend income websites provide a wealth of information as well as dividend stock ... high dividend stocks, a dividend stock rating system, and investing videos, ... which allow you to create a dividend portfolio using their online tools.
What is relative dividend yield?
Relative Dividend Yield is dividend yield of a stock compared the dividend yield of the S&P 500
What is the effect of a stock dividend on a corporation's stockholders'equity accounts?
The stock Dividend is more or less profit sharing. When a dividend paying company is profitable they pass along those profits to the shareholders in the form of a dividend check.
