Virtual Stock Market: Stock Dividend Vs. Cash Dividend
If you are learning about the stock market, then you may have heard about dividends. You may not yet know what that term means or how it relates to the stock market at all. You may not even know that there are cash dividends and stock dividends. That is alright, because you will have a clear understanding of what a cash dividend is, and what a stock dividend is by the time you are done reading this article. So, read on and you will know a little more about key stock market information than you did before. Who knows how soon this information could become useful.
So, what are dividends anyway? To start off, the word dividend originates from the word dividendum, which in Latin indicates something that is to be divided. They are payments made to the shareholders by the corporation or company they own stock in that has been approved by the Board of Directors beforehand. This is paid out from company profit. This is one way a company or corporation distributes a portion of their earnings. They can be paid in the form of cash or stock. They are usually paid out in a set amount per share owned. So, how much of a dividend payment you would receive would be determined by the amount of stock you own in a company or corporation. In most scenarios you would receive your payment on a set schedule with the possibility of special dividend payments. In some countries dividend payments are subject to taxation. Depending on the company you may be eligible to participate in a dividend reinvestment plan which may allow you to purchase more stock with your dividend payment. It is important to note that not all companies and corporations offer dividend payments to their shareholders. That company could still be a worthwhile investment. That is something you would need to research before you purchase a company's stock.
A cash dividend is the usual form of payment companies use to pay the dividend payment to their shareholders. This is paid out in the form of money on the payment date. As said before the amount of the payment you receive is usually dependant on the amount of stock you currently own. Depending on your preferences you could receive this in the form of a check or an electronic transfer in your bank account.
A stock dividend is not as common as a cash dividend but they still are an available method of dividend payment that some companies use. This is paid out in the form of additional stock in the company on the payment date. The amount of this payment is usually dependent on the amount of stock you currently own. You may not have more money because of it but in the end you do own more stock in the company you already have invested to.
Now you should understand what a dividend is and the difference between a cash dividend and a stock dividend. Hopefully, you feel a little bit more knowledgeable on the subject. After all, there is just so much to learn about the stock market.
So, what are dividends anyway? To start off, the word dividend originates from the word dividendum, which in Latin indicates something that is to be divided. They are payments made to the shareholders by the corporation or company they own stock in that has been approved by the Board of Directors beforehand. This is paid out from company profit. This is one way a company or corporation distributes a portion of their earnings. They can be paid in the form of cash or stock. They are usually paid out in a set amount per share owned. So, how much of a dividend payment you would receive would be determined by the amount of stock you own in a company or corporation. In most scenarios you would receive your payment on a set schedule with the possibility of special dividend payments. In some countries dividend payments are subject to taxation. Depending on the company you may be eligible to participate in a dividend reinvestment plan which may allow you to purchase more stock with your dividend payment. It is important to note that not all companies and corporations offer dividend payments to their shareholders. That company could still be a worthwhile investment. That is something you would need to research before you purchase a company's stock.
A cash dividend is the usual form of payment companies use to pay the dividend payment to their shareholders. This is paid out in the form of money on the payment date. As said before the amount of the payment you receive is usually dependant on the amount of stock you currently own. Depending on your preferences you could receive this in the form of a check or an electronic transfer in your bank account.
A stock dividend is not as common as a cash dividend but they still are an available method of dividend payment that some companies use. This is paid out in the form of additional stock in the company on the payment date. The amount of this payment is usually dependent on the amount of stock you currently own. You may not have more money because of it but in the end you do own more stock in the company you already have invested to.
Now you should understand what a dividend is and the difference between a cash dividend and a stock dividend. Hopefully, you feel a little bit more knowledgeable on the subject. After all, there is just so much to learn about the stock market.
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