What Can Be the Best Options for the Proper Capital Dividend

A joint-stock company can pay dividends on the results of its work. They are calculated according to the accounting records quarterly – for the first quarter of the fiscal year, for the six months, 9 months and year. In practice, dividend payments are made, as a rule, based on the results of the work for the year. This is due to the laborious procedure of transferring payments to shareholders and with seasonal factors of work of organizations that may affect the financial result. So, the source of dividends is the company’s profit from economic activity, and the form of payments is cash. Possible payment of property of the company in the event that such a method is provided by the charter. Know more about capital dividend Election now.

It is prescribed without fail:

  • amount;

  • form of payment, and if payment is not money, then the procedure for settling with shareholders is additionally established;

The date on which the composition of shareholders is fixed – these persons will receive income.

The date on which the composition of shareholders is fixed – these persons will receive income. But we ran ahead – first the board of directors determines the recommended amount of payment and the date on which the list of shareholders – recipients of dividends is determined.

After that, the board of directors assembles a general meeting and already there the owners of the shares of the company decide what to do with profit send it to the development of the JSC or pay it in whole or in part.

A characteristic feature of the stock market is stable, but relatively small dividend payments on shares of the largest companies and low profitability of the second and third echelons. The yield on dividends of domestic companies, the so-called “blue chips”, is about 5-10%. For example, with an average value of shares in PJSC Gazprom of 150 dollars, annual payments to shareholders amount to 7-8 rubles or about 5%. Often, there are no payments at all. Companies, making a profit, invest it again in business.

The company can determine the size of dividends, based on a number of criteria, such as: Stable policy. Even if the corporate profit indicator is constantly changing, it will strive in every possible way to maintain a stable level of payments.

Target payout ratio

The policy pursues a certain long-term ratio of dividends to income. The goal is to pay a certain percentage of the profit, but the amount of dividends is set in nominal dollar terms per share and depends on their number in circulation.

Permanent dividend payout ratio

The company pays a certain percentage of profit in each year in the form of dividends, so their value directly depends on its size.

Residual model

The company makes profit on the necessary capital investments, and dividends are paid out of the remaining amount.


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