A dividend is a payment that a company makes to its shareholders in the form of cash or additional shares. It is paid out of the profit that the company generates through the regular course of its business.

There’s no limit to the number of times a company can declare a dividend during a financial year. The frequency of payments is determined by the company’s board of directors. Generally, most companies declare dividends either once or twice during a financial year.

The four different types of dividends that companies usually declare include cash dividends, stock dividends, scrip dividends and property dividends. However, out of these four types, the first two - cash dividend and stock dividend are the most preferred methods of dividend.

The three important dates concerning dividends are the declaration date, record date and ex-dividend date. The declaration date is the date on which the dividend payments are declared. The record date, meanwhile, is the cut-off date used for determining the eligibility for the dividend payments.

Only shareholders who appear on the company’s records (Register of Members) as of the declared record date will be eligible to receive dividends. The ex-dividend date is the first day a stock trades without the dividend component. Individuals who purchase a stock on or after the ex-dividend date will not be eligible to receive dividends.

Stocks of well-established companies with mature businesses and strong financial health often pay dividends regularly to their shareholders. Furthermore, dividends are paid to the holders of equity stock (common stock) as well as to the holders of preference stock.

When you invest in dividend stocks, you create a passive income source that makes cash payments periodically. Furthermore, dividend shares are also more stable and less prone to market volatility. The stocks also have the potential for price appreciation; however, the potential usually tends to be lower compared to growth stocks.

Dividend stocks regularly pay the profits generated through the course of their business to their shareholders. Growth stocks, meanwhile, reinvest the profits they generate into their business to expand and grow their operations.

Yes. Investing in dividend stocks does come with its share of risks. Market risk, risk of dividend cuts, interest rate risk and industry or sector-specific risks are some of the risks associated with dividend shares.

The stock prices actually fall after a split since the primary objective of the corporate action is to reduce the market value of the shares to bring it down to a more accessible level for retail investors.

The decision to buy a stock before or after the split depends on factors like your goals, investment horizon, risk profile and strategy. Some investors prefer to purchase the stock before a split anticipating a potential increase in the share price due to increased demand, whereas others may prefer to purchase the stock after the split due to the lower entry price.

Stock splits don’t affect the profits of the company in any way. However, they reduce the Earnings Per Share (EPS) of the company in the same ratio as the stock split. For instance, in the case of a 2-for-1 stock split, the EPS will be reduced by half after the split.

Yes. Companies have the freedom to choose the ratio of the stock split as they wish. Although the most common ratio is 2-for-1, there have been instances where companies have split their shares in 3-for-1 and 5-for-1 ratios.

A stock split doesn’t make a company more valuable or less valuable. In fact, it doesn’t affect a company’s valuation at all. It only increases the number of outstanding shares and reduces the share price to make the stock more attractive to a wider range of investors.

No. The market value and capitalisation of the company remain the same after a stock split. Since the increase in the number of shares is matched by the reduction in the value of the shares, there won’t be any change in the market value.

A stock split is largely considered to be a good move for both the company and investors. Since a split increases the total number of outstanding shares, the liquidity in the counter increases, benefiting both the company and investors. The subsequent reduction in the value of the shares benefits investors since it makes the shares more accessible and attractive to a broader investor base.

A stock split has a major impact on the share price, total number of outstanding shares, liquidity, dividend distribution and stock perception. It increases the number of shares and liquidity while simultaneously decreasing the share price and dividend per share.

The primary disadvantage of a stock split is the potential spike in volatility, leading to temporary price distortions. It also leads to a reduction in the Earnings Per Share (EPS) and Dividend Per Share (DPS), which can negatively impact the way investors perceive the company’s shares.

A rights issue is a method through which a company raises capital by offering existing shareholders the opportunity to buy extra shares at a discounted price. This enables the company to boost its financial position without seeking external investors. It's a strategic move for companies aiming to fund expansion, repay debts, or finance new projects while maintaining shareholder loyalty.

Following a rights issue announcement, stock prices usually experience volatility. Initially, prices may decline due to the increase in available shares that may potentially dilute existing ownership stakes. However, over the long term, the impact can vary depending on factors like investor confidence, the company's performance, and market conditions.

Rights issues offer several benefits to both companies and shareholders. For companies, they provide a cost-effective method to raise capital internally, minimising or eliminating the need for external financing. Additionally, they strengthen the company's financial position, enabling it to pursue growth opportunities or address financial obligations.

Shareholders benefit by having an opportunity to purchase additional shares at a discounted price, which can potentially increase their ownership stake and enhance long-term returns.

Deciding whether to participate in a rights issue requires careful consideration of various factors. Investors should assess the company's financial health, growth prospects, and the terms of the rights issue, including the subscription price and the discount offered. Additionally, investors need to evaluate their own investment objectives, risk tolerance, and portfolio diversification strategy before making an informed decision.

Yes, if you are not interested in participating in the rights issue, you have the option to sell your rights entitlements on the stock market before the subscription period ends. This allows you to monetise your entitlements by selling them to other investors. However, selling rights entitlements may result in missed opportunities for potential capital appreciation if the rights issue proves to be successful. Research and due diligence are the keys before deciding.

The decision to buy additional shares in a rights issue depends on various factors that you need to consider carefully. The prominent factors include the company's present financial stability, future growth prospects, industry outlook, and the purpose of the rights issue as stated in their announcement letter. Moreover, you should also assess the subscription price, the discount offered, and your own investment objectives and risk tolerance to make an informed investment decision.

The entitlement ratio in buybacks determines the proportion of shares each shareholder is entitled to sell back to the company. It's calculated based on factors like the total number of shares held and the company's buyback offer size.

The record date in share buybacks is the date on which shareholders must be recorded in the company's books to be eligible for participating in the buyback. It determines which shareholders are entitled to tender their shares during the buyback offer period.

Once approved, a company can typically conduct a buyback for a period specified in its buyback proposal, which is often within 12 months from the date of approval by the shareholders or the board of directors.

The acceptance ratio in stock buybacks represents the proportion of shares tendered by shareholders that are accepted by the company for repurchase. It is calculated by dividing the total number of shares accepted by the company by the total number of shares tendered.

Share buybacks can sometimes lead to an increase in the stock price if the company reports improved earnings per share EPS and other financial metrics. However, there's no guarantee. In some cases, the stock price may remain unchanged or even decline post-buyback, depending on various market factors that influence the company and the sector it operates in.

You can make a potential profit from buybacks if you sell your shares back to the company at a higher price than what you had originally paid to buy those shares. In another case, if you hold on to your shares, i.e. not sell them during the buyback, and if the stock price increases later on, the value of your investment may increase.

Often, the stock price movement varies after a buyback. It can increase if the buyback results in higher earnings per share (EPS) for the company and/or improved investor sentiment. However, as is usually the case, market dynamics and other macroeconomic factors can also influence stock price movement post the buyback offer.

Yes, depending on the terms of the buyback offer and the number of shares you hold, you can sell all or a portion of your shares in a buyback offer. However, it is important to review the buyback offer document and consider key factors such as entitlement ratio and acceptance ratio (among others) before making your decision.