What is dividend ?

Dividend refers to a reward, cash or in any other case, that a organisation offers to its shareholders. Dividends may be issued in various forms, consisting of cash payment, stocks or any other form. A employer’s dividend is decided via its board of directors and it calls for the shareholders’ approval. However, it is not obligatory for a agency to pay dividend. Dividend is generally a part of the earnings that the company stocks with its shareholders.

After paying its creditors, a enterprise can use component or complete of the residual earnings to reward its shareholders as dividends. However, whilst corporations face cash scarcity or while it needs cash for reinvestments, it can also pass paying dividends. When a agency pronounces dividend, it additionally fixes a record date and all shareholders who’re registered as of that date turn out to be eligible to get dividend payout in share to their shareholding. The business enterprise usually mails the cheques to shareholders inside in every week or so. Stocks are generally bought or sold with dividend until two business days in advance of the record date and then they flip ex-dividend.

A recent study found that dividend-paying firms in India fell from 24 per cent in 2001 to almost 16 per cent in 2009 before rising to 19 per cent in 2010.