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 out of place to sort it out, since dividends are an additional source of profit, however, with some nuances. Suppose there is a successful company. It directs part of the profit received this year to the development of the company, and distributes the remainder (dividends) to those who have the right to do so - to the holders of shares. The amount of this income depends on decisions made at shareholders meetings. In Russia, many companies pay small dividends. However, large organizations strive to raise them, in this they are even supported by state authorities.
Western Experience
Rich practice in this area is 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:
- Organizations that have “growth stocks." Most of the profit they have is directed to develop the business, and dividends are not paid. The value of stocks can rise extremely high.
- The second type of enterprises whose profits go into dividends are “cash cows”. The value of stocks is practically not growing.
Dividends - this is the share of profit that the company pays to its shareholders after it settles with all taxes. 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 their growth potential.
How to receive dividends?
To become the owner of a well-earned income, it is not necessary to hold shares for a whole year, you can purchase them at the moment when the register closes. This date is approved at a meeting of the Board of Directors. Usually it falls on spring time, and in the summer meetings of shareholders are held. There are different ways in which dividends can be paid. It:
- payments to a special brokerage account ;
- transfers to current accounts in banks;
- cash payment;
- Money transfers.
You don’t have to think that buying shares one day before the closing date of the registry, and then selling them immediately, 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 occur quarterly, every 6 or 12 months. For example, this summer, many large organizations distributed income from a portion of the profits earned in the past, 2012. Accordingly, the payment of dividends 2013 will be made next year.
New rules
In 2014, significant changes will occur. Here is some of them:
- Income from shares will be distributed according to the new rules. Dividends will have to be paid even when the company reduces its authorized capital.
- Previously, the company established the payment procedure on its own, now it will be allowed only with 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, the purpose of which is 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 acquire shares in any company in order to receive good income, first carefully study everything related to its activities. Pay attention to the prospects of its development, stability in the market.