What is Dividend?

Dividends Definition

Dividend is generally the profit of company distributed their shares holder in proportion to their shares.Company share profit to share holder if company in profits.
If any company declare dividends, its paid to the shareholder as per the provisions of India Companies Act.Dividend declaration decision takes by The Board of Directors of Companies.Mostly company gives dividend on annually if company makes profits.Whichever company gives regular dividend to its shareholders, that shareholders invest in that company for a long time.To keep the company stable in the market, it gives regular dividend to its shareholders, which is making liquidity in their company and they can make their company bigger.

Some Important features of a Dividend Paying Company

a.)Stability in Share Prices

b.)Confidence Among Shareholders

c.)Good Growth Prospects 

d.)Helpful in long term planing of company.

Many investors who invest long-term in the company, they get the benefit of dividend and bonus shares.Some shareholder gets an annual dividend of millions of rupees because they invest in a good credit company, these company's shares are not go and up more one side, this company gets stable in the market and it maintains its investor wealth.

Popular dividends in Indian Stock Market

a.)Cash Dividend

This is most popular dividend in stock market.Most of companies gives cash dividend to their shareholder according to their hold shares.Regular dividend paid annually,company declare dividend in Annual General Meeting with  The Board of Directors of Companies.

b.)Stock Dividend

The Stock Dividend is the form of dividend its known as Bonus Share.Where company have surplus share reserve but does not have more liquidity then company gives bonus share instead of cash dividend.

c.)Bond Dividend

When company have not liquidity and its not running in profit then company can gives to shareholder to dividend in the form of bonds after 5 to 7 years.Its also good form of dividend.

I think we should buy stocks of good companies like Reliance Industries,TCS etc. for a long time, so that we continue to get the benefits of cash dividend and bonus shares and our portfolio will also be increase.

Hope you understand this article,What is a Dividend?,if there is any question related to this article, then you can ask and comment.

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