Dividends are a way to improve your financial condition

Every financier knows a lot about dividends, but for those whose work is not connected with economics and finance, this concept is a mystery. It's not at all superfluous to understand it, since dividends are an additional source of profit, however, with some nuances. Suppose there is a successful company. Part of the profit received this year, it sends to the development of the company, the balance (dividends) is distributed to those who have the right to do this - the shareholders. The amount of this income depends on the decisions taken at the shareholders' meetings. In Russia, many companies pay small dividends. However, large organizations tend to increase them, in this they are even supported by state authorities.

Experience of the West

A rich practice in this area is in other countries. For the first time financial indices began to count in the 90s of the XIX century. All Western AOs are divided into two main groups:

1. Organizations that have "growth shares". The bulk of their profits go to develop business, and dividends are not paid. The value of shares can rise very high.
2. The second type of enterprises whose profits are spent on dividends are "cash cows". The value of their shares is practically not growing.

Dividends are the share of the profits that the company pays to its shareholders after it has settled with all taxes. It should be noted that the receipt of this income is often not the main purpose of the acquisition of shares. The main thing here is the ability to see the potential for their growth.

How to receive dividends?

To become the owner of a well-deserved income, it is not necessary to hold shares for a year, you can purchase them at the moment when the register will be closed. Such a date is approved at a meeting of the Board of Directors. Usually it falls on spring time, and in summer shareholders' meetings are held. There are different ways in which dividends can be paid. It:

- payments to a special brokerage account ;

- transfers to current accounts with banks;

- cash payment;

- Money transfers.

Do not think that buying shares one day before the closing date of the register, and then selling them immediately, you can get huge dividends. This is not true. The fact is that during this period the market value of shares is reduced by an amount that is proportional to the premium paid on them.

Frequency of payments

The amount and procedure for payment of dividends shall be established by the Meeting of Shareholders. This can happen quarterly, every 6 or 12 months. For example, this summer, many large organizations distributed income from part of the profits earned in the past, 2012. Accordingly, the payment of 2013 dividends will be made as early as next year.

New rules

In 2014, there will be significant changes. Here are some of them:

1. The income from shares will be distributed according to the new rules. Dividends will have to be paid even when the company reduces its authorized capital.
2. Earlier, the company established the payment procedure independently, now it will be allowed only with non-monetary forms of settlement. Dividends on new amendments will have to be transferred by mail or transferred to a bank account.

There are other changes, the purpose of which is to improve the relations between companies and shareholders.

So, now you know that the amount of dividends depends on the profit that the organization receives. If you have a desire to purchase shares of any company in order to receive a good income, first carefully study everything related to its activities. Pay attention to the prospects for its development, stability in the market.