What Is a Declared Dividend?

Dividend distribution means that within the limits prescribed by law, the board of directors determines the time, form, dividend rate and amount of dividend distribution according to the company's net profit situation.

Dividend payment

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Dividend distribution means that within the limits prescribed by law, the board of directors determines the time, form, dividend rate and amount of dividend distribution according to the company's net profit situation.

There are three forms of dividend distribution:

(1) Cash dividends. Dividends distributed in cash.

(2) Stock dividends. Shareholders receive not cash but stocks, and new stocks are allocated based on the size of corporate profits and the number of shares held by each shareholder. This form of dividend distribution is actually that the company issues new shares to be subscribed by the original shareholders, but the original shareholders do not have to pay cash, but instead pay the dividends they should receive, which not only reduces the costs for the company to issue new shares, but also maintains the original shareholders Of shares.

(3) Property dividends. That is, dividends are distributed in the form of company assets, such as the company's other securities, products and other property. This form of dividend distribution is relatively rare. The form of dividends paid by each company is determined by the actual situation of the company.

There are generally four dates in the dividend distribution process, namely:

(1) Dividend declaration date, that is, the date on which the company's board of directors decides and announces the distribution of dividends;

(2) Dividend exemption date means the date on which the joint-stock company announces the removal of dividends. Investors who purchase such stocks on that date cannot participate in the distribution of dividends;

(3) Equity registration date refers to the date on which shareholders register for equity as required by a joint stock company, after which shareholders have the right to distribute dividends after registering for equity;

(4) Dividend payment date. Refers to the date on which dividends are formally distributed to shareholders. Dividends are dividends paid by shareholders to shareholders at a certain percentage of the stock's share each year in profit. Shareholders of preferred shares generally do not enjoy dividends, and only shareholders of ordinary shares can enjoy dividends. A joint stock company can only distribute dividends when it makes a profit, and cannot distribute the company's assets as dividends to shareholders.

There are two main forms of stock company dividends:

(1) Cash dividends. Pay dividends in cash;

(2) Stock dividends. That is to use the company's stock as a bonus. The dividends of most joint-stock companies in the world are paid in cash, but in order to reduce cash outflows, some companies pay in the form of stocks, or part of cash and part of stocks. ^[1]