Friday, 9 March 2012

Dividend Analysis

Dividend Analysis:
Dividend:
1. A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (dividends per share). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield.

Also referred to as "Dividend Per Share (DPS)."

2. Mandatory distributions of income and realized capital gains made to mutual fund investors.

Explanation:
1. Dividends may be in the form of cash, stock or property. Most secure and stable companies offer dividends to their stockholders. Their share prices might not move much, but the dividend attempts to make up for this.

High-growth companies rarely offer dividends because all of their profits are reinvested to help sustain higher-than-average growth.

2. Mutual funds pay out interest and dividend income received from their portfolio holdings as dividends to fund shareholders. In addition, realized capital gains from the portfolio's trading activities are generally paid out (capital gains distribution) as a year-end dividend.

Interim Dividend:

A dividend payment made before a company's AGM and final financial statements. This declared dividend usually accompanies the company's interim financial statements.
>>This is used more frequently in the United Kingdom, where it is usual for dividend payments to occur semi-annually. The interim dividend is generally the smaller of the 2 payments made to shareholders.

Cum Dividend:

When a buyer of a security is entitled to receive a dividend that has been declared, but not paid.
>>Cum dividend means "with dividend." A stock trades cum-dividend up until the ex-dividend date. On or after this point, the stock trades without its dividend rights.

Declaration Date:

1. The date on which the next dividend payment is announced by the directors of a company. This statement includes the dividend's size, ex-dividend date and payment date. It is also referred to as the "announcement date".

2. The last day on which the holder of an option must indicate whether he or she will exercise the option.

Explanation :
1. Once it is authorized, the dividend is known as a declared dividend and it becomes the company's legal liability to pay it.

2. The declaration date of all listed stock options in the U.S. is on the third Friday of the listed month. If there is a holiday on the Friday, the declaration date falls on the third Thursday.

Board Of Directors - B Of D:

A group of individuals that are elected as, or elected to act as, representatives of the stockholders to establish corporate management related policies and to make decisions on major company issues. Such issues include the hiring/firing of executives, dividend policies, options policies and executive compensation. Every public company must have a board of directors.

Explanation :
Board Of Directors - B Of D'In general, the board makes decisions on shareholders' behalf. Most importantly, the board of directors should be a fair representation of both management and shareholders' interests; too many insiders serving as directors will mean that the board will tend to make decisions more beneficial to management. On the other hand, possessing too many independent directors may mean management will be left out of the decision-making process and may cause good managers to leave in frustration.

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