Dividends are a portion of a company's profits that is paid to its shareholders. If the company grows and develops, makes a profit, then it gives part of it to the owners of shares who have the right to receive income on them in proportion to the share owned by each investor.
Instructions
Step 1
From the point of view of the Tax Code, dividends are any income received by a shareholder (participant) from an organization in the distribution of profits remaining after all necessary taxes have been paid, including interest on preferred shares. Payment of dividends is carried out in proportion to the shares of shareholders in the authorized capital of this organization.
Step 2
In accordance with tax legislation, dividends also include any income that a citizen receives outside of our country that is related to dividends under the legislation of other states.
Step 3
The decision to pay dividends is made by the company only if a number of conditions are met: - the authorized capital of the company is fully paid; - the actual value of the share or part of the share of the LLC participant is paid, all shares of the joint-stock company are redeemed; - the company does not meet the signs of bankruptcy, when paying dividends there will be no signs of insolvency; - at the time of the decision, the value of the company's net assets is greater than its authorized capital.
Step 4
However, compliance with all the above conditions does not mean that dividends will be unconditionally paid. The fact is that from the moment the decision is made until the moment of payment, the property situation of the enterprise may deteriorate and circumstances may arise that prevent payment. After elimination of these circumstances, the company will be obliged to pay dividends, the decision on which was made.
Step 5
As a rule, the dividend yield on stocks is not high (5-10%). It is defined as the ratio of the size of the dividend to the market price of the share. Therefore, the more expensive you buy a share, the lower the yield on it will be.
Step 6
The total amount of the company's dividends is determined as a percentage of the profit remaining after taxes. For preferred shares, the amount paid as a dividend is determined in the company's charter, for example, at 15 percent of net profit.
