Dividends are a way to improve your financial condition

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Every financier knows a lot about dividends, but for those whose work is not related to economics and finance, this concept is a mystery. It will not be superfluous to understand it at all, since dividends are an additional source of profit, however, with some nuances. Suppose there is a successful company. Part of the profit received in the current year, she directs to the development of the company, the rest (dividends) is distributed to those who have the right to it - the shareholders. The amount of this income depends on the decisions taken at the meetings of shareholders. In Russia, many companies pay small dividends. However, large organizations are striving to increase them, in this they are even supported by the state authorities.

Experience the West

There is a rich practice in this area in other countries. For the first time, financial indices began to be calculated in the 90s of the XIX century. All Western AOs are divided into two main groups:

1. Organizations with "growth stocks". The main part of their profits is directed to develop the business, and dividends are not paid. Share prices could go extremely high.
2. The second type of enterprises whose profits go to dividends are cash cows. Their share pricepractically does not grow.

Dividends are the share of profits that a company pays out to its shareholders after all taxes have been paid. It should be noted that obtaining this income is often not the main purpose of acquiring shares. The main thing here is the ability to discern the potential for their growth.

How to get dividends?

To become the owner of a well-deserved income, it is not necessary to hold shares for a whole year, you can purchase them at the moment when the register closes. Such a date is approved at a meeting of the Board of Directors. Usually it falls in the spring, and in the summer there are meetings of shareholders. There are different ways in which dividends can be paid. This is:

- payouts to a special brokerage account;

- transfers to current bank accounts;

- cash payment;

- money transfers.

Don't think that buying shares the day before the closing date of the register, and then selling them right away, you can get huge dividends. This is not true. The fact is that during this period, the market value of shares decreases by an amount that is proportional to the premium paid on them.

Payout frequency

The size and procedure for paying dividends are established by the Meeting of Shareholders. This can happen quarterly, every 6 or 12 months. For example, this summer, many large organizations distributed income from a portion of the profits earned in 2012 last year. Accordingly, the payment of dividends-2013 will be made already innext year.

New rules

In 2014 there will be significant changes. Here are some of them:

1. Income from shares will be distributed according to the new rules. Dividends will have to be paid even when the company reduces its share capital.
2. Previously, the society established the order of payments on its own, now it will be allowed only for non-monetary forms of payment. Dividends under the new amendments will have to be transferred by mail or transferred to a bank account.

There are other changes to improve the relationship between companies and shareholders.

So, now you know that the amount of dividends depends on the profit that the organization receives. If you have a desire to purchase shares of a company in order to receive a good income, first carefully study everything related to its activities. Pay attention to the prospects for its development, market stability.