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Dividend – Meaning and its types

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Dividend - Meaning and its types
Dividend - Meaning and its types

We have detail information of Dividend – Meaning and its types.

Dividend – Meaning and its types.

Following are the information.

Meaning

Dividend is a portion of a profit which is distributed to its shareholders in the form of cash or bonus share or both as a reward for investing. Boards of Director purpose the dividend of the company and it is approved by the all the shareholders in AGM. Similarly, dividend is distributed annually. Common shareholder who holds the stock till the book closer date gets the dividend.

Moreover, the dividend also needs to be approved by the association of the category as well. For Dividend of Commercial banks is approved by Nepal Rastra Bank.

Types of Dividend

Following are the types of dividends.

  • Bonus Share
  • Cash Dividend

Normally, Bonus Share and cash dividend is form of dividend in Nepal.

Brief Information of Cash Dividend and Bonus Share

Following are the brief defination of terms.

Cash Dividend

This is most common types of dividends. The company pay cash dividend directly to its shareholder account.

Bonus Share

Bonus Share is the additional share given to its shareholder for free. Technical not free, the company pays the price for it. Hence, Bonus Share increases outstanding share which in return increases capital of the company but not the market capitalization.

Hence, these are the information of Dividend.

Other Important Links:

a. Dividend history of Commercial Bank: CLICK HERE

b. Dividend Capacity of Commercial Bank: CLICK HERE

Frequently Asked Questions

a. What is the meaning of dividend and its types?

= A dividend is the distribution of portion of the profit to its shareholder annually. Its types are Cash dividend and Bonus share.

b. Example of Dividend?

= For example, in FY 2078/79, dividend of Nabil Bank ltd (NABIL) was 30% in which 18.5% was bonus share and 11.5% cash dividend.

c. What is cash Dividend?

= Giving Dividend to its shareholder in the form of cash from the profit of the company.

d. What is bonus share?

= Bonus share is a type of dividend in which company gives existing shareholders additional shares for free.

e. What is dividend tax in Nepal?

= 5% is the dividend tax in Nepal for both cash dividend and bonus share.