Dividend

Dividend

What is the dividend meaning

As the word root suggests, a sum of money is divided to make dividends. Therefore, literally speaking, a dividend is a part of a larger payout someone is entitled to.

What are dividends

Owning a stock of a public company means being its shareholder i. e. one of its owners. As such, you’re entitled to a part of the company profit proportionate to your ownership as you’d be in any other case where you have a share of a business. After taxes and all due payments, company revenue is reduced to net income. The latter may be distributed among shareholders as dividends. Therefore, a dividend is a part of the company profit that you get as a company shareholder.

What is the dividend payout ratio

As mentioned above, company net income is distributed among shareholders as their profit – but not all of it. A part of income is held to be reinvested in the business – that’s retained income. The remaining part is what shareholders receive, and the percentage this part makes in the total net income of a company is the dividend payout ratio.

Also, a dividend policy is the policy a company uses to structure its dividend payout to shareholders.

Why are dividends good

When you trade or invest in stocks, you have two types of income: value gains and profit. Value gain refers to a case when you sell a stock at a higher price than the one you’d bought it at. It’s similar to closing your trade with profit with any other asset such as currency or commodity. The second type of income is dividend income: you get a quarterly cash payment on your stock holdings whatever their value change has been. Therefore, trading stocks (here are the best stocks to trade) not only enables you to potentially have more profits but makes a buy-and-hold approach beneficial.

What are dividend types

Cash is not the only form a company profit can be paid out as to the shareholders. It’s the most common, though. Here is the full list of dividend options.

  • Cash dividend: you get paid in cash
  • Stock dividend: instead of money, you get your part of the company profit as additional stocks.
  • Property dividend: you get items of value, e. g. art
  • Scrip dividend: a “postponed” cash dividend that works like a bank deposit – you receive not the dividend value but a value plus interest on it after a certain period following the date when the dividend was assigned.

When are dividends paid

Normally, dividends are quarterly payments. That means, you receive your share of the company profit every three months.

Here is the FBS dividend calendar with the expected dates of the corresponding dividend payouts

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2021-05-19 • Updated

Frequently asked questions

  • How to open an FBS account?

    Click the ‘Open account’ button on our website and proceed to the Personal Area. Before you can start trading, pass a profile verification. Confirm your email and phone number, get your ID verified. This procedure guarantees the safety of your funds and identity. Once you are done with all the checks, go to the preferred trading platform, and start trading. 

  • How to withdraw the money you earned with FBS?

    The procedure is very straightforward.  Go to the Withdrawal page on the website or the Finances section of the FBS Personal Area and access Withdrawal. You can get the earned money via the same payment system that you used for depositing. In case you funded the account via various methods, withdraw your profit via the same methods in the ratio according to the deposited sums.

  • How to start trading?

    If you are 18+ years old, you can join FBS and begin your FX journey. To trade, you need a brokerage account and sufficient knowledge on how assets behave in the financial markets. Start with studying the basics with our free educational materials and creating an FBS account. You may want to test the environment with virtual money with a Demo account. Once you are ready, enter the real market and trade to succeed.

  • How to activate Level Up Bonus?

    Open Level Up Bonus account in web or mobile version of FBS Personal Area and get up to $140 free to your account.

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