TYPES OF DIVIDEND
Dividends are the proportion of earnings distributed to the shareholders. Dividend can be paid in several forms i.e. Cash Dividend and Stock Dividend. The commonly used dividends are as follows :
- Cash dividend
- Scrip dividend
- Bond dividend
- Stock Dividend
- Property dividend
- Liquidating Dividend
1. Cash Dividend:
Cash dividend is the most common and preferable form of dividend. This type of dividend can be paid via electronic fund transfer or printed paper cheque. This dividend are reimbursed to the shareholders against their investment and commonly is a taxable income. Dividend paid to the shareholders are not the expenses of the company, rather a deductions of retained earnings.
It is paid periodically out the business concerns EAIT (Earnings after interest and tax). Cash dividends are common and popular types followed by majority of the business concerns.
2. Stock Dividend
Stock dividend is paid in the form of the company stock due to raising of more finance. Under this type, cash is retained by the business concern. Stock dividend may be bonus issue. This issue is given only to the existing shareholders of the business concern.
3. Bond Dividend
Bond dividend is also known as script dividend. If the company does not have sufficient funds to pay cash dividend, the company promises to pay the shareholder at a future specific date with the help of issue of bond or notes.
4. Property Dividend
Property dividends are paid in the form of some assets other than cash. It will distributed under the exceptional circumstance. This type of dividend is not published in India.