Dividend Payment Schedule
A dividend is a payment made by any corporation to the shareholder members of the company. This is a portion of corporate profits that is paid out to stockholders on a regular schedule. Any time a corporation with shareholders makes a profit, the money can be reinvested into their business or it can be paid as a dividend to shareholders.
Methods of Payment
For joint stock companies, dividends are a fixed amount per share owned by the shareholder. Public companies pay dividends on a fixed schedule, but can declare dividends at any given time. Cooperatives allocate their dividends solely according to the activity of the members, so the dividends are considered pre-tax expenses.
Dividends are settled usually settled in cash, but can also be paid in store credit in retail consumers’ co-ops or more shares in a given company. Cash dividends are the most common, and are generally paid by check. For each share owned, a specific amount of money is then distributed to the shareholder. If a shareholder owns 100 shares and the cash dividend is 50 cents per share, then there will be a check issued for $50.
Stock and scrip dividends are paid with additional stock shares given to shareholders. These are normally issued in proportion to shares that are already owned. If a person owns 100 shares of stock, a 5 percent stock dividend would give them an additional five shares.
Dividend Schedules
All dividends have to be declared or approved by the board of directors every time they are paid out. With public companies, this is done on four specific dates: For example, the declaration date may be July 27, the ex-dividend date August 6, the record date August 10, and the payment date September 10.
The declaration date is the day the Board of Directors announces its plan to pay a dividend. When any company declares a dividend, a record date is set. This stipulates a deadline by which you must be a shareholder to get a dividend. Once the record date is set, the stock exchanges fix an in-dividend and an ex-dividend date.
The in-dividend date is the last day where stock can be bought. The ex-dividend date is two days before the record date for securities, and the payment date is the day the checks are actually mailed out.
Dividends as Income
Dividends can be a way for many people to make a decent living, depending on how many shares are owned and how dividends are paid out. If you were a shareholder who is paid by cash on a quarterly basis, you would get a check every three months for the dividends your company has earned.
If the company does very well during the quarter, they can pay out larger amounts to the shareholders. However, if the company takes a loss, they can opt to pay lesser amounts out of monies that were saved earlier in the year before other dividends were paid.
