What is a ‘dividend’
Final dividend declared at the annual General meeting company (AGM) for the financial year. This amount is calculated after all financial statements are recorded and the Directors are aware of the company’s profitability and financial health. This differs from the interim dividend, which is made before the final financial statements of the company are known and released.
The term is more often used in the United Kingdom, the final dividend, as a rule, the largest payments company in a given year.
Breaking down the ‘dividend’
Final dividend can be installed in the amount, which is paid quarterly, semiannually or annually. It is the percentage of earnings that is paid after the company pays for capital expenditures and working capital. Dividend policy selected in dependence on the discretion of the Board of Directors.
Interim dividends can follow the same strategy, final dividends, but because the interim dividend is paid before the end of the financial year, financial statements that accompany the interim dividend has not been checked.
Dividends allow shareholders to receive income and benefit from income growth. While the interim dividend declared by the Directors and is subject to approval by shareholders, the final dividend to the vote and approved by the General meeting of shareholders after earnings is not known. Dividends may be paid in cash and/or shares for the interim and final dividends.
An example of the final dividend
As an example, if you own 500 shares of the company XYZABC, and the company XYZABC pays $1.50 in dividends each year, you will receive a $750 income in the form of dividends each year. XYZABC if the company doubles its dividend to $3 per share, investors will receive $1,500. Final dividends are declared and generally paid on an annual basis along with earnings.
The difference between the final dividend and liquidation dividend
While final dividend may refer to the final dividend is issued to shareholders when the company completes its existence, this type of dividend is known as liquidation dividends. The liquidating dividend is a Type of payment that a Corporation makes to its shareholders in partial or complete liquidation.
For the most part, the distribution, such as liquidation dividends out of capital of the company. The return of capital is generally not taxable to shareholders. Liquidation dividend differs from the interim and final dividends, which are issued from the operating profits of the Company or retained earnings.