Dividend
A dividend is a distribution of a company's profits to its shareholders. Dividend payments are one way for companies to return profits to investors for the capital they have invested.
Advantages of Dividends:
* Passive Income: Dividends can be a source of passive income for investors. This means that investors can receive money regularly without having to actively manage their investments.
* Increase Total Return: Dividends can increase the total return on investment in stocks. In addition to capital gains, investors also receive additional income from dividends.
* Sign of Company's Financial Health: Consistent dividend payments can be a sign of a company's good financial health. This shows that the company has enough profit to share with its shareholders.
* Increase Investor Confidence: Consistent dividend payments can increase investor confidence in the company. This can encourage investors to buy more shares of the company's stock, which can increase the stock price.
Disadvantages of Dividends:
* Reduces Investment Funds: Dividend payments mean that the company has less funds to reinvest in the business. This can hinder the company's growth in the future.
* Uncertainty: The amount of dividends paid by a company is not always certain. The company may decide to reduce or even stop paying dividends if they are experiencing financial difficulties.
* Taxes: Dividends are subject to income tax. This means that investors must pay tax on the money they receive as dividends.
Forms of Dividends
Dividends can be paid to shareholders in various forms, including:
1. Cash Dividend:
This is the most common form of dividend. Cash dividends are paid to shareholders in the form of cash. The company usually sets a dividend payment date and the amount of dividend that will be paid per share.
2. Stock Dividend:
A stock dividend is the distribution of new shares to existing shareholders. The number of new shares distributed is usually proportional to the number of shares already owned by shareholders. Stock dividends do not provide cash to shareholders, but increase the number of shares they own in the company.
3. Property Dividend:
A property dividend is the distribution of company assets to shareholders. The assets distributed can be property, such as land or buildings, or other assets, such as shares of another company. Property dividends are usually paid when the company has excess assets that are not needed for its business operations.
4. Liquidating Dividend:
A liquidating dividend is the distribution of company assets to shareholders when the company is dissolved. Liquidating dividends are usually paid after all of the company's debts have been paid off.
5. Debt Promise Dividend:
A debt promise dividend is a dividend payment paid to shareholders in the form of debt. The company usually issues securities to shareholders that promise to pay dividends periodically. Debt promise dividends are similar to bonds, but they usually have a lower interest rate and are not guaranteed by the company's assets.
After knowing who will be paid the dividend, the next step is to determine the Shareholders Entitled to Receive the Dividend
Step 1
* Cum date: The last date an investor can buy shares to be eligible for the dividend.
* Ex date: The date after the dividend is distributed, so investors who buy shares on that date are no longer entitled to receive the dividend.
* Recording date: The date of record for shareholders who are entitled to receive the dividend.
* Payment date: The date the dividend is paid.
Step 2: Determining the Amount of the Dividend
* Interim dividend: A dividend that is distributed before the end of the fiscal year.
* Final dividend: A dividend that is distributed after the end of the fiscal year.
* Dividend payout ratio: The percentage of a company's net profit that is distributed as dividends to shareholders.
* Dividend per share: The amount of dividend received per share of stock.
Step 3: Dividend Distribution
* Through the Indonesian Central Securities Custodian (KSEI): Dividends are distributed to investors through their securities accounts at KSEI.
* Through a broker: Dividends are distributed to investors through their securities accounts at the broker where the investor purchased the shares.
"Written to fulfill the requirements of the Financial Management course from Dr. Darmawan"
