DIVIDEND

WHAT IS DIVIDEND
 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).
TYPES
 CASH DIVIDEND

 STOCK DIVIDEND

 PROPERTY DIVIDEND
CASH DIVIDEND
 Money paid to stockholders, normally out of the corporation's
current earnings or accumulated profits. 
 For example, suppose you own 100 shares of XYZ Co which
has made record sales this year due to an unusually high
demand for his unique peach flavored beer. The company
therefore decides to share some of this good fortune with the
stockholders and declares a dividend of $0.10 per share. This
means that you will receive a check from XYZ Company for
$10.00 ($0.10*100). In practice, companies that pay
dividends usually do so on a regular basis of four times a
year.
STOCK DIVIDEND
 Second most common dividend paying method, pays
additional shares rather than cash.
 Suppose that XYZ Company wishes to issue a dividend but
doesn't have the necessary cash available to pay everyone. He
does, however, have enough treasury stock to meet the
requirements of the dividend payout. So instead of paying
cash, XYZ decides to issue a dividend of 0.05 new shares of
CBC for every existing one. This means that you will receive
five shares of XYZ for every 100 shares that you own. If any
fractional shares are left over, the dividend is paid as cash
(because stocks can't trade fractionally). 
PROPERTY DIVIDEND
 Another type of dividend is the property dividend, but it is
used rarely. This type of allocation is a physical transfer of
a tangible asset from the company to the investors.
 For instance, if XYZ Company was still insistent on
paying out dividends but didn't have enough Treasury
stock or enough money to pay out all investors, the
company could look for something physical (property) to
distribute. In this case, XYZ might decide that his unique
peach beer would be the best substitute, so he could
distribute a couple of six-packs to all the shareholders.
IMPORTANT DATES
 DECLARATION DATE
 EX DATE
 RECORD DATE
 PAY DATE
Contd..
 Declaration date - This is the date on which the board of directors
announces to shareholders and the market as a whole that the company will
pay a dividend.
 Ex-date or Ex-dividend date - On (or after) this date the security trades
without its dividend. If you buy a dividend paying stock one day before the
ex-dividend you will still get the dividend, but if you buy on the ex-
dividend date, you won't get the dividend. Conversely, if you want to sell a
stock and still receive a dividend that has been declared you need to sell on
(or after) the ex-dividend day. The ex-date is the second business day before
the date of record.
 Date of record - This is the date on which the company looks at its records
to see who the shareholders of the company are. An investor must be listed
as a holder of record to ensure the right of a dividend pay out.
 Date of payment (payable date) - This is the date the company mails out the
dividend to the holder of record. This date is generally a week or more after
the date of record so that the company has sufficient time to ensure that it
accurately pays all those who are entitled.
WITHHOLDING TAX
 A dividend withholding tax is an income tax on
dividend payments to the stockholders
(shareholders) of a company.
 In many jurisdictions, the government requires the
company to withhold at least the standard tax,
paying this to the national revenue authorities and
paying out only the balance to the shareholders.
 Withholding tax rate differs based on different
jurisdiction.
ADR

 An American Depositary Receipt (ADR) represents ownership in the

shares of a non-U.S. company that trades in U.S. financial markets.
 The stock of many non-US companies trade on US stock exchanges
through the use of ADRs.
 ADRs enable U.S. investors to buy shares in foreign companies
without the hazards or inconveniences of cross-border & cross-
currency transactions. ADRs carry prices in US dollars, pay dividends
in US dollars, and can be traded like the shares of US-based
companies.
 ADRs carry prices in US dollars, pay dividends in US dollars, and can
be traded like the shares of US-based companies.
 Individual shares of a foreign corporation represented by an ADR are
called American Depositary Shares (ADS).
GDR
 A Global Depository Receipt or Global Depositary Receipt (GDR) is a certificate
issued by a depository bank, which purchases shares of foreign companies and
deposits it on the account. GDRs represent ownership of an underlying number of
shares. A GDR is very similar to an American Depositary Receipt.
 Global Depository Receipts facilitate trade of shares, and are commonly used to
invest in companies from developing or emerging markets.
 Prices of Global Depositary Receipt are often close to values of related shares, but
they are traded and settled independently of the underlying share.

 GDRs are often listed in the Frankfurt Stock Exchange, Luxembourg Stock
Exchange and in the London Stock Exchange, where they are traded on the
International Order Book (IOB). Normally 1 GDR = 10 Shares, but not always.
THANKS