Admin Wed 08 Apr 2009, 11:00 pm
1) Dividend
- Dividend must be declared by a company's Broad of director
- 4 important dates to remember regarding dividends
1)
Declaration date Broad of directors announces its intention to pay a dividend.
2)
In-dividend date Is the last day which is one trading day before the ex-dividend date, where the stock is said to be CUM dividend.
( CUM = buyer of a security is entitled to receive a dividend )
In order words, existing holders of the stocks and anyone who buys it on this day will receive the dividend.
3)
Ex-dividend date Existing holders of the stock will receive the dividend even if they now sell the stock.
whereas anyone who now buys the stocks will not receive the dividend.
Its relatively common for a stock's price to decrease on the ex-dividend date by an amount roughly equal to the dividend paid.
4)
Payment date There are two types of dividend.
1) Single Tier system dividend ( STS )
- When the company declares dividends, the profit thus distributed is no longer taxable on the shareholder.
- Dividend received by shareholders are completely tax-free.
2) Two Tier imputation dividend ( TTS )
- Dividend distributed by those companies are not tax exampted and shareholders are again taxable.
- Profit earned by companies are taxed twice.
a) at company level
b) in the hand of shareholder who receives a dividend.