What do we mean by dividend settlement?
The dividends are distributed to shareholders, the owners of shares. They provide the stock corporation (AG) with capital and receive their dividends once a year. They are the share in the profit of the shares and thus success-dependent.
All shares together form the share capital of a stock corporation. The shares, insofar as they can be publicly acquired, are traded on the designated place, the stock exchange. About their Security identification number (wkn), which is issued by the Wertpapier-Mitteilungen publishing group, they can be identified at any time. Since 2003, the WKN have been incorporated into the ISIN (International Securities Identification Number), which is also made available by the community of publishers.
The dividend is often used as well Distribution of profits called for a company with limited liability (GmbH). Your shares form the share capital. The dividends follow the regulations of stock corporation law.
The determination of dividends
The basis for the payment of dividends is a proposal that the management board and the supervisory board submit to the general meeting of an AG for a resolution. It is formulated in “one hundred” of the nominal value of a share and is based on the company's earning power. In addition, the economic situation and dividend policy of the AG must be taken into account. In addition, the Articles of Association must be observed for the distribution of the dividend if preferred shareholders can assert claims for preferred or excess dividends. In its resolution on the appropriation of profits, the general meeting also determines the amount of the dividends. The right to their payment expires after four years.
The distribution of dividends ##
The dividends are that portion of the balance sheet profit of an AG that is distributed to the shareholders.
The balance sheet profit is part of the annual net profit, which is created by deducting the following amounts:
* Compensation of the loss carryforward
* Deduction of the amounts that must be set aside in accordance with legal requirements
* Deduction of retained earnings that the AG can form
The remaining amount is the share in the profits of their shares due to the shareholders, i.e. the distributable dividends.
The types of dividends ##
There are the following types of dividends:
- Cash dividend: It is the usual form of cash payment. Dividends in kind: The dividends may also be paid out in kind. It can even include the distribution of part of an AG's business to its shareholders.
- Excess dividend: It describes the surcharge that preference shareholders receive over ordinary shareholders.
Preferred dividend: It is the privilege of the preferred stockholders to a higher dividend than the common stockholders receive. It is a legal requirement for non-voting preference shares.
Stock dividend: You are issuing additional shares without any consideration from the shareholders.
Advance dividend: It is an advance payment that is only permitted under certain conditions.
The dividend yield
The return on such dividends is calculated by dividing the dividend by the share price and multiplying it by 100. This is how you get the return on the share capital. So the return depends not only on the dividend, but also on the share price, which is constantly changing. If the share price rises, the share of profit falls, but the overall value of the share increases. If the share price falls, the portion of the dividend increases, but the value of the share shrinks.
The dividends for private investors ##
The dividend is also an important criterion for private individuals when choosing their capital investment. But it requires careful analysis, as the explanations on the dividend yield show; because an investment strategy that is based solely on the amount of dividends is not necessarily recommended. There are other considerations to be made about investing in stocks.
In addition to buying on the stock exchange, one option is to invest in funds that contain shares. You benefit from their stabilizing long-term effect. The others included Securities dampen the price fluctuations of the stock values.
What is decisive for the capital investment is what the Private investors aims at:
* higher dividends of a non-voting preferred share
* Dividend security of a fund investment
* Considering the dividend as a decision criterion for his financial commitment
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