Dividend meaning and 5 types of its

Dividend meaning and 5 types of its. The term dividend is certainly familiar to stock investors. Dividends are eagerly awaited by investors in the stock market. What are dividends?

In general, dividends are the distribution of profits or proceeds paid to shareholders based on the number of shares owned. Usually, the dividends distributed can be in the form of cash or shares.

Dividends are also part of the company’s profits which are distributed to shareholders. The amount of dividends to be distributed is proposed by the company’s board of directors and approved at the general meeting of shareholders.

Dividend meaning

For simplicity, you can note that dividends are rights or allotments of companies that benefit parties who are investors or shareholders. Usually, dividends are distributed by the company once or twice a year.

When a company records a large profit or profit, it will usually distribute dividends to investors in the company. Dividend payments are regulated based on the provisions that apply to the types of existing shares.

Shareholders who receive dividends are those who own shares of the company concerned during the dividend distribution period. The amount of the dividend value or the number of dividends received by shareholders depends on the number of shares they own.

5 Types of dividend

However, some companies do not distribute dividends because the funds from the company’s income are invested in business capital. This condition is known as retained earnings. On the other hand, companies that record losses usually do not distribute dividends.

To be clear, here are five types of dividends that you need to know:

Cash dividend

Cash dividends are dividends distributed by a company to its shareholders in the form of cash or cash. This type of dividend can be said to be the most frequent distribution of dividends.

This dividend is also called Cash Dividend. Cash dividends are paid to owners or shareholders in the form of cash in cash. This cash dividend is the type most often used by various companies. In addition, cash dividends are also the type that is the favorite of many shareholders.

Stock dividend

Stock dividends are dividend distributions made in the form of shares of a company for its investors. As the name implies, investors do not get cash from the distribution of dividends. But will get an increase in the number of shares.

Stock dividends or stock dividends are given in the form of shares. This type of dividend will later be able to increase the number of outstanding shares.

If dividend payments are made in the form of shares, the liquidity position of a company will not change. This is because the payment of stock dividends is not part of a company’s cash flow.

Property dividend

Property dividends are dividends that are distributed in the form of assets. This dividend is a type of dividend that is quite rarely done, usually because the distribution process is relatively difficult.

In simple terms, the property dividend or dividend of goods is a type of dividend that is distributed in the form of goods. However, several things must be considered by the company in distributing this dividend.

A company must ensure that the goods that are distributed are goods that can be shared. Not only that but it must also be ensured that the distribution of dividends by a company cannot interfere with and have a periodic effect on the company.

Liquidating dividend

Liquidating dividend is a dividend distributed to shareholders in the form of a portion of the profit and a portion of the return on capital. Companies that will provide liquidating dividends are generally companies that have plans to discontinue their company or the company is experiencing bankruptcy.

Liquidating dividends do not come from profits obtained from the company. This type of dividend is the opposite of all types of existing dividends. The distribution of dividends that are distributed alone will refer to a reduction in the capital of a company.

Script dividend

Script dividend is a dividend distributed from the company to shareholders in the form of scripts or debt pledges. In this type of dividend, the company makes a promise to its investors that it will pay the dividend at a predetermined time.

In the existing script, a certain amount will be stated to be paid to the script holder. In the script, it will also include the due date to pay it. The application of dividends using this type of script will make a company have debt in the short term.

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