Dividend can be defined as the payment made to the stockholders of a company that have a share in the company’s profit as they have invested equity in the company. There are a number of different types of dividends such as:-
- Cash Dividend
- Property Dividend
- Stock Dividend
- Scrip Dividend
- Liquidating Dividend
Cash dividend is one of the most common types of dividend that pays the stockholders in form of cash. The dividend is paid to the share holders on the date of payment. Whereas on the date of declaration the management declares the amount of divided that is to be paid to the share holders.
Property dividend is the type of non mandatory dividend issued by the company. This dividend is paying the stock holders in the form of fair market value of the assets such as property. The variance of fair market value and book value of the assets is recorded to find out the gain or loss of the company
In this type of dividend the company issues its common stock as a dividend to the common stock holders. If the issuance of the share is less than 25 percent of the share outstanding the dividend is considered to be stock dividend.
Scrip dividend is actually a promissory note that is issued by the company in the situation when there are no funds with the company to issue cash or stock dividend. This type of dividend may or may not contain the interest.
This is the reimbursement of the actual capital that was invested by shareholders in the company. This type of dividend is issued when company decided to pay back the equity capital invested by the stockholders.
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