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    Types of Dividends!

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    Aryan Hate

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    Types of Dividends!

    Uploaded by

    Aryan Hate
    3 views10 pages

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    © © All Rights Reserved

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    Copyright:

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    3 views10 pages

    Types of Dividends!

    Uploaded by

    Aryan Hate

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 10

    TYPES OF DIVIDEND

    Explained in Simple Terms!


    What are Dividends?
    Dividends are payments made by companies to
    their shareholders as a reward for investing in
    the company.

    It is a form of profit distribution to shareholders


    by a corporation.

    There are many different forms of dividends

    Let’s see each of them →


    1) Cash Dividends
    Cash dividends are payments made in cash
    directly to shareholders. They are usually paid on
    a per-share basis.

    Example: If you own 100 shares of a company and


    it declares a ₹10 per share dividend, you will
    receive ₹1,000 (i.e. 100 * ₹10 ) in cash.

    Benefits:
    Immediate cash in hand.
    Great for investors seeking regular income.
    2) Stock Dividends
    Instead of cash, companies might issue
    additional shares to shareholders. The number
    of new shares is typically a percentage of the
    existing shares owned.

    Example: If a company announces a 10% stock


    dividend and you own 100 shares, you will
    receive 10 additional shares.

    Benefits:
    Increases the number of shares you own
    without any cost.
    Potential for increased future value if the
    company grows.
    3) Preferred Dividends
    These are dividends paid to holders of preferred
    shares, which generally have a fixed dividend
    rate and are paid before any dividends are issued
    to common shareholders.

    Example: If you hold preferred shares with a 5%


    fixed dividend rate and the shares are valued at
    ₹100 each, you’ll receive ₹5 per share annually.

    Benefits:
    Predictable and steady income stream.
    Preferred shareholders have priority over
    common shareholders for dividend payments.
    4) Property Dividends
    These are dividends paid out in the form of
    assets other than cash, such as products, real
    estate, inventory, intellectual property, or
    subsidiary company shares.

    Example: A tech company might distribute new


    gadgets to its shareholders as a property
    dividend.

    Benefits:
    Unique and sometimes more valuable than
    cash.
    Useful for companies with significant non-
    cash assets.
    5) Scrip Dividends
    Scrip dividends are essentially promissory notes
    issued by a company promising to pay the
    shareholders at a later date. This can be a
    solution when a company lacks immediate cash.

    Example: A company might issue a scrip dividend


    promising to pay ₹10 per share in six months.

    Benefits:
    Provides flexibility to the company.
    Guarantees future income to shareholders
    6) Liquidating Dividends
    These dividends are paid when a company is
    partially or fully liquidating. They often return a
    portion of the original investment back to
    shareholders.

    Example: During a liquidation (winding up), a


    company might return ₹50 per share to its
    investors helping them recover part of their
    original investment.

    Benefits:
    Helps recover part of the investment during
    liquidation.
    Provides clarity on the winding-down
    process.
    Dividends are a key part of investing and
    understanding them can totally enhance your
    investment strategy.

    What type of dividend do you find most


    appealing?

    Share your thoughts and experiences


    in the comments below!
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