Question

What are some characteristics associated with dividends paid on common stock?

Answer 1

Characteristics of dividend paid on common stock:

1. Common stockholders have no right to demand payment of dividends.
2. The dividend declared could be of any amount and can vary from year to year. It is dependent on the decision taken by the board of directors.
3. Dividends are declared by the board of directors.
4. Dividends may be cash dividends, in which case dividend is paid in cash, or stock dividends, in which case addtional shares are given without any payment made by the stockholders.
5. Dividends are paid to stockholders whose names are entered in the register of stockholders on a specificed date, which, is called the record date.
6. Dividends may be regular dividends, which companies declare on publication of results or special dividends, which may be declared on some specific situations.
7. Dividends are paid on the payment date, which will be after the record date.