What is Dividend ?

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                         A dividend is a share of the profit earned by the company which is payable to the shareholders of the company. Most of the people have a misconception of dividend is paid on the current market price of the share. In fact, the dividend is paid as the " percentage on the face value of the share "

Safest Dividend Yields

                       There should not be any assumption, that a company having high face value will pay a high dividend, and low face value companies will pay low dividends.  The dividend percentage will be approved by the Board of directors. A company having the highest face value cannot generate a higher dividend unless the company made a huge profit and announce the high percentage dividend.

                       There is no relationship between the higher face value, you may get a higher dividend. In the case of a company announces a lower percentage of dividends on a company having a higher face value share and company having lower face value may announce a higher percentage of dividends.

For example:-  Reliance Industries Limited was trading at 2146 with the face value of Rs.10/share. Here the company has announced a dividend of  65%, which means a dividend of 10*65% = 6.5/share.  Dr. Reddy was trading at 4571 with the face value of Rs. 05/share. here company has announced the dividend of 500%, which means a dividend of  05*500% = 25/share

                       Hence we should not estimate the company on the basis of face value, but it should need to consider the dividend payment. 
 
                      A company paying the regular and high dividend will be traded high in most of the cases.

                         Most of the investors, underestimate the importance of dividends and concentrate on the share prices only. For example, a business started, need regular cash flow.  A businessman cannot make an estimate that I will grow my capital appreciation and sell-off on one day with more returns. It will not show real growth, because the value is not permanent. A business valued on regular cash flows will be stable rather than a business value on the scope of growth.

                        When we are choosing a company to invest after our due diligence, it is also important to check the payment of the dividend history of the company. 

                        There are many types of dividend, but in general, we have the following three majorly, ie as follows:-

01 Final dividend:-  The dividend, which is paid at the end of the financial year by the company on the basis of the annual earnings of the company.
 
02 Interim dividend:- The dividend will also be paid two or more times in between the two financial years.

03 Special dividend:- This form of dividend will be in most of the cases when the company has reached the expectations of the shareholders and the company has huge profits.

To be continued...!

You are welcomed with your valuable suggestions.
Location: Hanamlonda, Warangal,

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