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Financial Terms | |
Dividend |
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Definition of DividendDividendA dividend is a portion of a company's profit paid to common and preferred shareholders. A stock DividendA payment a company makes to stockholders. Earnings before income tax. The profit a company made DividendThe payment of after-tax profits to shareholders as their share of the profits of the business for an accounting period. DividendA payment made to shareholders that is proportional to the number of shares dividendPeriodic cash distribution from the firm to its shareholders. DividendAs the term dividend relates to a corporation's earnings, a dividend is an amount paid per share from a corporation's after tax profits. Depending on the type of share, it may or may not have the right to earn any dividends and corporations may reduce or even suspend dividend payments if they are not doing well. Some dividends are paid in the form of additional shares of the corporation. dividends paid by Canadian corporations qualify for the dividend tax credit and are taxed at lower rates than other income. DividendUnlike dividends which are paid to company shareholders, participating insurance policy dividends are not based on the company's overall profits. Rather, they are determined by grouping policies by type and country of issue and looking at how each class contributes to the company's earnings and surplus.
Related Terms:Cash dividendA dividend paid in cash to a company's shareholders. The amount is normally based on ![]() cash dividendPayment of cash by the firm to its shareholders. constant-growth dividend discount modelVersion of the dividend discount model in which dividends grow at a constant rate. Cum dividendWith dividend. Cumulative dividend featureA requirement that any missed preferred or preference stock dividends be paid Discounted dividend model (DDM)A formula to estimate the intrinsic value of a firm by figuring the Dividend clawbackWith respect to a project financing, an arrangement under which the sponsors of a project Dividend clienteleA group of shareholders who prefer that the firm follow a particular dividend policy. For dividend discount modelComputation of today’s stock price which states that share value equals the present value of all expected future dividends. Dividend discount model (DDM)A model for valuing the common stock of a company, based on the ![]() dividend growth methoda method of computing the cost Dividend growth modelA model wherein dividends are assumed to be at a constant rate in perpetuity. Dividend incomeIncome that a company receives in the form of dividends on stock in other companies that it holds. Dividend limitationA bond covenant that restricts in some way the firm's ability to pay cash dividends. Dividend payout ratioPercentage of earnings paid out as dividends. dividend payout ratioComputed by dividing cash dividends for the year dividend payout ratioPercentage of earnings paid out as dividends. Dividend policyAn established guide for the firm to determine the amount of money it will pay as dividends. Dividend PolicyThis policy governs Canada Life's actions regarding distribution of dividends to policyholders. It's goal is to achieve a dividend distribution that is equitable and timely, and which gives full recognition of the need to ensure the ongoing solidity of the company. It also specifies that distribution to individual policyholders must be equitable between dividend classes and policyholder generations, and among policyholders within any class. Dividend rateThe fixed or floating rate paid on preferred stock based on par value. Dividend reinvestment plan (DRP)Automatic reinvestment of shareholder dividends in more shares of a Dividend rightsA shareholders' rights to receive per-share dividends identical to those other shareholders receive. Dividend yield (Funds)Indicated yield represents return on a share of a mutual fund held over the past 12 dividend yield ratioCash dividends paid by a business over the most Dividend yield (Stocks)Indicated yield represents annual dividends divided by current stock price. DividendsAmounts paid to the owners of a company that represent a share of the income of the company. DividendsProfits paid out to shareholders by a corporation. Dividends per shareAmount of cash paid to shareholders expressed as dollars per share. Dividends per sharedividends paid for the past 12 months divided by the number of common shares Ex-dividendThis literally means "without dividend." The buyer of shares when they are quoted ex-dividend Ex-dividend dateThe first day of trading when the seller, rather than the buyer, of a stock will be entitled to ex-dividend dateDate that determines whether a stockholder is entitled to a dividend payment; anyone holding stock before this date is entitled to a dividend. Extra or special dividendsA dividend that is paid in addition to a firm's "regular" quarterly dividend. Homemade dividendSale of some shares of stock to get cash that would be similar to receiving a cash dividend. Indicated dividendTotal amount of dividends that would be paid on a share of stock over the next 12 months information content of dividendsdividend increases send good news about cash flow and earnings. dividend cuts send bad news. Liquidating dividendPayment by a firm to its owners from capital rather than from earnings. MM dividend-irrelevance propositionTheory that under ideal conditions, the value of the firm is unaffected by dividend policy. Perfect market view (of dividend policy)Analysis of a decision on dividend policy, in a perfect capital Preferred Stock Stock that has a claim on assets and dividends of a corporation that are priorto that of common stock. Preferred stock typically does not carry the right to vote. Residual dividend approachAn approach that suggests that a firm pay dividends if and only if acceptable Signaling view (on dividend policy)The argument that dividend changes are important signals to investors Special dividendAlso referred to as an extra dividend. dividend that is unlikely to be repeated. Stock dividendPayment of a corporate dividend in the form of stock rather than cash. The stock dividend stock dividendDistribution of additional shares to a firm’s stockholders. Tax differential view ( of dividend policy)The view that shareholders prefer capital gains over dividends, Traditional view (of dividend policy)An argument that "within reason," investors prefer large dividends to With dividendPurchase of shares in which the buyer is entitled to the forthcoming dividend. Related: exdividend. AssurisAssuris is a not for profit organization that protects Canadian policyholders in the event that their life insurance company should become insolvent. Their role is to protect policyholders by minimizing loss of benefits and ensuring a quick transfer of their policies to a solvent company where their benefits will continue to be honoured. Assuris is funded by the life insurance industry and endorsed by government. If you are a Canadian citizen or resident, and you purchased a product from a member life insurance company in Canada, you are protected by Assuris. AsymmetryA lack of equivalence between two things, such as the unequal tax treatment of interest expense Attribute biasThe tendency of stocks preferred by the dividend discount model to share certain equity Attribution RulesLegislation under which interest, dividends, or capital gains earned on assets you transfer to your spouse will be treated as your own for tax purposes. Interest or dividends relating to property transferred to children under 18 also will be attributed back to you. The exception to this rule is that capital gains relating to property transferred to children under 18 will not be attributed back to you. Auction rate preferred stock (ARPS)Floating rate preferred stock, the dividend on which is adjusted every capital stockOwnership shares issued by a business corporation. A business Cash cowA company that pays out all earnings per share to stockholders as dividends. Or, a company or Cash flowIn investments, it represents earnings before depreciation , amortization and non-cash charges. Cash FlowIn investments, NET INCOME plus DEPRECIATION and other noncash charges. In this sense, it is synonymous with CASH EARNINGS. Investors focus on cash flow from operations because of their concern with a firm's ability to pay dividends. Cash flow coverage ratioThe number of times that financial obligations (for interest, principal payments, Cash flow per common shareCash flow from operations minus preferred stock dividends, divided by the CASH FLOWS FROM FINANCING ACTIVITIESA section on the cash-flow statement that shows how much cash a company raised by selling stocks or bonds this year and how much was paid out for cash dividends and other finance-related obligations. Closing entriesThe entries that transfer the balances in the revenue, expense, and dividend accounts to Retained earnings and zero out the revenue, expense, and dividend accounts for the next period. Common SharesAre equity instruments that take no security against assets, have no fixed terms of repayment and pay no fixed dividends. Common stockThese are securities that represent equity ownership in a company. Common shares let an Common StockThat part of the capital stock of a corporation that carries voting rights and represents Conflict between bondholders and stockholdersThese two groups may have interests in a corporation that Constant-growth modelAlso called the Gordon-Shapiro model, an application of the dividend discount Contract monthThe month in which futures contracts may be satisfied by making or accepting a delivery. Contribution PrincipleThis is the principle which specifies the factors that must be taken into account when calculating dividends. At Canada Life, the key factors are: interest earnings, mortality, and operating expense. Cumulative preferred stockPreferred stock whose dividends accrue, should the issuer not make timely Current AccountThat part of the balance of payments accounts that records demands for and supplies of a currency arising from activities that affect current income, namely imports, exports, investment income payments such as interest and dividends, and transfers such as gifts, pensions, and foreign aid. Date of paymentDate dividend checks are mailed. Date of recordDate on which holders of record in a firm's stock ledger are designated as the recipients of Declaration dateThe date on which a firm's directors meet and announce the date and amount of the next Declaration dateThe date on which the board of directors has declared a dividend. Discretionary cash flowCash flow that is available after the funding of all positive NPV capital investment DistributionsPayments from fund or corporate cash flow. May include dividends from earnings, capital Double-tax agreementAgreement between two countries that taxes paid abroad can be offset against Feasible target payout ratiosPayout ratios that are consistent with the availability of excess funds to make Financial CovenantA feature of a debt or credit agreement that is designed to protect the lender or creditor. It is common to characterize covenants as either positive or negative covenants. financing activitiesOne of the three classes of cash flows reported in the Floating-rate preferredPreferred stock paying dividends that vary with short-term interest rates. floating-rate securitySecurity paying dividends or interest that vary with short-term interest rates. Fundamental analysisSecurity analysis that seeks to detect misvalued securities by an analysis of the firm's growth ratean estimate of the increase expected in dividends Holder-of-record dateThe date on which holders of record in a firm's stock ledger are designated as the Imputation tax systemArrangement by which investors who receive a dividend also receive a tax credit for Income stockCommon stock with a high dividend yield and few profitable investment opportunities. Indicated yieldThe yield, based on the most recent quarterly rate times four. To determine the yield, divide Information-content effectThe rise in the stock price following the dividend signal. internally generated fundsCash reinvested in the firm; depreciation plus earnings not paid out as dividends. Linter's observationsJohn Lintner's work (1956) suggested that dividend policy is related to a target level of Lynch & CoLiquidating dividend Non-cumulative preferred stockPreferred stock whose holders must forgo dividend payments when the Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |