Introduction To Dividends:Terms and Other Basics

A dividend is a dispersal of a share of a company’s income in a class of its stockholders.  It can be in the form of cash, stock, and property.

Many established companies offer dividends to stockholders. Frequently, the stock prices of these financially-secure companies do not move much, and dividends are offered as a way to attract,  reward and maintain investors.

Investing in dividend-paying stocks can be an effective technique of increasing long-term wealth.

Terms To Know And Other Basics

This section will present dividend terms and discuss the basics of dividends, From researching, how dividends work, reinvestment and taxes.

Cash Dividend

This is the Cash payments made to stockholders. It is paid on a per share basis, indicated as a dollar currency or as a percentage of  the recent market value. The cash dividends are usually paid out of the company’s recent earning added profits.

Date Of Record

This is the date that the company uses to check its shareholders or the “holders of record.”

Declaration Date

This is the date when the Board of Directors of a certain company broadcasts an upcoming dividend.

Dividend Coverage Ratio

This is the percentage in a companys income and its net dividend to stockholders.The percentage supports the investors’ measure if a company’s income are enough to cover its dividend obligations.Dividend coverage is calculated by dividing income per share by the dividend per share.

Dividend Reinvestment Plan (DRIP)

This plan is presented by definite dividend-paying corporations that permit you to automatically reinvest cash dividends by buying extra shares of stock on the dividend payment date.

Dividend Yield

This is a financial percentage that demonstrates how much a company pays out in dividends per year relating to its share price. It is estimated by dividing the annual per share by the recent price of the stock.

Ex-Dividend Date

This is the date on or after that the stock is traded without a previous stated dividend.

One-time Dividend

A distinctive dividend paid in addition to regular cash dividends.

Payment Date

This is the date when the dividend is arranged to be paid.


Any company, individual or institution that has possession of at least one share in a company, also called a stockholder.

Stock Dividend

This term refers to dividends in the form of extra shares of stock as a replacement for cash.

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