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Dividends Stocks Report covers stocks which provide dividends to you as investor.
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Why you shouldn’t miss dividend stocks in volatile market
When the stock market is rising steadily, growth stocks are the best to invest in. But in volatile or declining markets, they may not be the best picks as they can struggle in unstable market conditions.
Should you not invest in volatile market? The answer is no and the alternative is dividend stocks.
Why Dividend stocks can provide balance to your portfolio:
Dividend stocks are not dependent on capital gains only. We invest in dividend paying stocks in anticipation of higher prices in the future, but part of your overall return will be comprised of the dividend yield on the stock in addition to capital gain.
Dividend paying companies are most established and financially strong and thus risk factor is less as compared to growth stocks.
The stock market can take a dive on international news, political factors, interest rate changes etc. but the performance of all companies don’t suddenly decline with a change in market sentiment. Some stable companies withstand despite the negative impact on the stock markets
The payment of dividends by a company is a sign of financially stable company. If a company has a track record of paying regular dividends to investors and the pattern is consistent over the years, it’s an indication of a solid and stable company.
Calculation of Dividends
You need three pieces of information to calculate dividends from retained earnings. First, locate the net income, which is reported at the bottom of a firm’s income statement. Find the retained earnings figures for the previous and current accounting periods. These figures are listed on the balance sheet and statements of stockholders’ equity and retained earnings. Subtract prior retained earnings from retained earnings for the current period. For example, if the prior year’s figure is $500,000 and current retained earnings equal $600,000, the retained earnings for the year equal $100,000. Subtract this figure from net income. If net income is $250,000, subtract $100,000 to find the amount of dividends paid to stockholders. In this example, dividends paid come to $150,000.
If you want to know the dividends paid per share, look on the balance sheet for the number of outstanding shares. Divide outstanding shares into the dividend amount. If there are 100,000 shares outstanding and the dividends paid equal $150,000, the dividend amount per share works out to $1.50.
What is an ‘Interim Dividend’?
An interim dividend is a dividend payment made before a company’s annual general meeting (AGM) and the release of final financial statements. This declared dividend usually accompanies the company’s interim financial statements. The interim dividend is issued more frequently in the United Kingdom where dividends are often paid semi-annually. The interim dividend is typically the smaller of the two payments made to shareholders.
What is a ‘Final Dividend?’
The final dividend is declared at a company’s Annual General Meeting (AGM) for a given fiscal year. This amount is calculated after all financial statements are recorded and the directors are aware of the company’s profitability and financial health. This is different than the interim dividend which is made before a company’s final financial statements are known and released.