Whenever a company earn profit significantly they will give some proportion of it to its shareholders called as Dividend. The board of directors decide the amount of money to be given as dividends to all shareholders. It’s a kind of reward given to its shareholder which also have voting rights when they buy shares in those companies.
Dividend are issued at various time fixtures with distinct payouts. It can be paid monthly, quarterly or even annually. However it is not necessary that company will only pay dividends when there is profit. Some of the corporation pays to maintain there track record of giving dividends to their shareholders.
As an illustration recently Piramal Enterprise has issued dividend for the year ending March 2018. Piramal Enterprises has declared an equity dividend of 1250.00% amounting to Rs 25 per share. Mostly large established corporation offers dividends. The company has a good dividend track report. It has consistently declared dividends for the last 5 years.
Top Dividend Paying Stocks in India :
Hindustan Petroleum Corporation Ltd (HPCL)
Indian Oil Corporation Ltd (IOC)
Power Finance Corporation Ltd (PFC)
Reliance Industries Ltd (RIL)
Coal India Ltd
National Aluminium Company Ltd (NACL)
Hindustan Zinc Ltd
How to calculate dividend :
In the first place there is no need to calculate dividends from your end as investor. In other words Dividends are not calculated, they are declared. Instead see how much dividend amount per share has been declared by the company. A company will declare that on a certain date the are going to pay Rs. X per share. If you own 100 shares of the company, the dividend that you receive will be Rs.X * 100.
Important dates associated with dividend:
- What is Announcement date ?
On this day major announcement made by the company for paying dividends to their respective shareholders. Although before announcement it must be approved by shareholders.
- What is Ex-dividend date?
Ex-date or Ex-dividend date is same thing this is the date on which eligibility to get the dividends expires. Let us suppose Infosys announced ex-date to be 26 April than if you buy or have shares on this date or after this date, will not be eligible for dividends. You have to have the share 1 business day prior or before that to be able to get qualified.
- What is Record Date ?
Companies decide & determines which shareholders are qualified for receiving of dividends. It’s a kind of cut-off date.
- What is Payment Date ?
This is the day when the shareholders will get the payment or money transacted to his account.
Why Dividend are paid :
Dividends are paid usually by the company to win the trust of their shareholders and investors. Indeed it is a way to recognize and give some part of profit the organisation earns. A high-value dividend declaration can indicate that the company is doing well and has generated good profits.
So when you want to invest money for long term make sure the company does pay a high dividend. As it becomes one of the passive earnings for your portfolio. For this reason Growth is equally important if you are looking for better returns .