Talk:Dividend

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Contents 1 stock dividend 2 Common and preferred stock dividends 3 deemed dividend 4 More information needed 5 Wikify? 6 Insurance dividends 7 dividend pay out ratio 7.1 In for a penny... 8 Simple English Wikipedia page

[edit] stock dividend

In the stock dividend section, the article says:

This is very similar to a stock split in that it increases the total number of shares while lowering the price of each share and does not change the market capitalization or the total value of the shares held.

I don't see why this is so. Imagine a company making a profit, and using it to buy some of its stocks on the stock market, and to give those stocks as dividend. This can drive the stock price higher, not lower! Or am I missing something? Nyh 09:39, 23 April 2007 (UTC)

These are two separate steps. If the company makes a profit and uses the profit to buy shares, it should increase the price of the shares - future profits will be split between fewer shares. If it then gives shares (presumably the same amount it bought), it is then splitting that same future profit between more shares. All it has done is redistribute the profits to the shareholders that chose not to sell. If the company (somehow) did both at the same time, it in theory should not change the price of the stock (all things being equal).--Gregalton 10:19, 23 April 2007 (UTC)

[edit] Common and preferred stock dividends

From researching, it looks like dividends are different for common stock and preferred stock. It would be nice if someone who is knowledgeable about it, not me, could add it to the article. -- Kjkolb 11:06, 19 December 2005 (UTC)

Not massively so, as they're still in essence a cash payment to the shareholders in lieu of the profits of the company. The major difference is that preferred stock dividends have a fixed maximum amount (usually as a percentage of the nominal value) while common stock dividends are paid as a variable amount depending on the distributable reserves of the company and the whim of the directors. Preferred stock holders also have to have their dividends paid in full (including any accumulated dividends for cumulative preferred stock) before the company can declare a dividend on its common stock. BaseTurnComplete 21:41, 31 December 2005 (UTC)

[edit] deemed dividend

anyone know what the term deemed dividend is? and how it is different from a standard dividend?

Answer: There is no actual cash involved in a 'deemed' dividend. The company pretends it has sent you the money. And then pretends that you used the cash to buy more shares of the company, which are issued from its treasury. Your broker's statement will show an increase in the number of shares you own. This method is frequently used to 'distribute' capital gains realized in the company that can be distributed tax-free in some countries.

Other answer: In some jurisdictions, for tax purposes, certain benefits accrued from the company are considered to be "deemed dividends" and taxable. For example, in some countries if you purchase a house in the name of a company (and you are the sole shareholder) and you live in it rent free, that can sometimes be considered a "deemed dividend" of an amount equivalent to the rental income value of the property.

[edit] More information needed

Are dividends usually paid monthly ? Annually ? What percentage of share price are typical dividends ? Of S&P500 ? Thanks.

Dividends are typically paid quarterly, semi-annually or annually. However, they can really be paid anytime a company wants to. Also, they can pay special one-time dividends if they feel that they have a lot of cash and that the investors are better served by getting the cash rather than the company spending it on existing or new ventures.--216.75.93.104 14:18, 25 September 2006 (UTC)

Public companies usually try to pay reguarly (quarterly, semi-annually or annually, as noted above). Public companies usually refer to any other dividends as "extraordinary" dividends. Private companies can (and do) declare dividends whenever they feel led. For small family companies, this may often be once a year on the last day of the tax year. Legis 07:45, 13 October 2006 (UTC)

[edit] Wikify?

I am not sure about the tenor (or title) of the sections "Shareholders like dividends because..." and "Reasons companies don't pay dividends". Apart from being not particularly encyclopediaic, (and a lot of it is POV, like the Graham / Dodd analysis) they largely oversimplify the issues (and to fully discuss those issues would be almost impossible). For example, in the UK, companies tend to declare dividends as little as possible, but often use profits to redeem shares to accelerate the growth in capital value of the shares, as capital gains are more tax efficient than income. I don't disagree with everything in their, but the language and titles could use moderating. Legis 07:43, 13 October 2006 (UTC)

It's useful stuff but could no doubt be reworded to be more encyclopaedic. Indeed it may have partially been reworded since you posted this. Re: Graham, yes, it's POV, but it's the citeable POV of one of investment's heavyweights. That is worthy of inclusion IMHO. I've added Buffett's thoughts on dividends as a counterweight.BaseTurnComplete 20:18, 28 March 2007 (UTC)

[edit] Insurance dividends

This article does not mention the sort of dividends (excess profits) distributed to policyholders by mutual insurance companies. Should it? Or should there be separate article for the insurance type of dividends? —The preceding unsigned comment was added by Dozen (talk • contribs) 18:44, 8 January 2007 (UTC).

As you suggest it's probably too specific to be included here.BaseTurnComplete 15:23, 20 March 2007 (UTC)

It is the ambition of most wikipedia articles to be comprehensive. I have now added a section Dividend#Mutuals where you might like to explain insurance company dividends. --Hroðulf (or Hrothulf) (Talk) 21:23, 20 April 2008 (UTC)

I have written something about US and UK insurance dividends. You might like to expand it to a more global view. --Hroðulf (or Hrothulf) (Talk) 19:31, 29 April 2008 (UTC)

[edit] dividend pay out ratio

is dividend payout ratio = dividend/Net Income or = divident/retained earning ?? it seems that the former is the definition. Then if a specific year, there is no enough net income, but dividend is payout since there is a large retained earning. how to calculate the payout ratio? Jackzhp 22:41, 23 April 2007 (UTC)

It would usually be shown as N/A (not applicable) but may show as negative (not usually, but you could see it). Easiest way to check: find a company with a dividend and losses and look them up on finance websites (each may have a different approach and definitions should be checked for all ratios): here's an example for Vodafone. (Hope the link works)--Gregalton 02:46, 24 April 2007 (UTC)

[edit] In for a penny...

If I know the dividend a share paid & the total value of dividends paid, how do I calculate the number of shares the dividend was paid on? Trekphiler 23:53, 17 August 2007 (UTC)

[edit] Simple English Wikipedia page

I'm not entirely certain if this is the right place to mention this (feel free to remove my comment if it is not), but the simple english wikipedia page on dividends is almost entirely empty - anyone here with a firm enough grasp on the topic willing to work on it? 206.107.108.225 (talk) 15:05, 11 January 2008 (UTC)

Thanks for the notice. I am new to this article, but I notice that the article at the Simple English Wikipedia is still just two sentences. At least an explanation of how a dividend is allocated for common stock of a joint stock company would be useful, if someone wants to take on that task. --Hroðulf (or Hrothulf) (Talk) 18:04, 8 May 2008 (UTC)