Dividends on common stock

The common stock dividend yield is: (Equation)

Annual Dividend / Current Market Price

Key dates relating to dividends are:

Declaration date, Ex-Dividend Date, and Payable date

When are dividends normally paid to investors?

Quarterly

A dividend is

a portion of a company's net profit that is distributed by the company to its stockholders

On the date that a corporation declares a cash dividend on a common stock, it

becomes a liability on the balance sheet of the corporation

Dividends are typically paid in

cash but can be paid in the form of stock or property

Corporations are NOT REQUIRED to pay dividends to

common stockholders

Dividends on common stock are not

fixed and fluctuate depending on the profitability of the company

Cash dividends paid to investors are

fully taxable at the federal, state and local level generally at a rate of 15% (Qualified)

If a corporation increased the dividend payment to shareholders but the market price of the stock was NOT adjusted, then it would

have the effect of increasing the yield on the common stock.

a dividend must be declared by

the Board of Directors before the common stockholders are legally entitled to it

Declaration date

the date on which a dividend is declared by resolution of the Board of Directors of the corporation

Ex-Dividend Date

the date on which the stock begins trade without the dividend, therefore a buyer of the stock would NOT be entitled to the dividend if the stock was purchased on or after the ex-date

Stock dividends generally are NOT taxed until

the time that the shares are sold and profits and losses are realized