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How does corporation distribute dividend to its shareholder?

Posted: Wed Oct 09, 2019 12:21 pm
by ZengGuo
Do amount of dividend paid to shareholders depends on how much share they own? for example, if you own 1% of the share, you will get 1% of the entire dividend. Do every shareholder will get dividend, or only those shareholders who owns the most shares of corporation. When corporation decide to pay dividend will they notify every single shareholders? Who decide how much dividend should be paid to shareholders?

Re: How does corporation distribute dividend to its shareholder?

Posted: Wed Oct 09, 2019 12:24 pm
by oldcomputerguy
This topic is now in the Investing - Theory, News & General forum.

Re: How does corporation distribute dividend to its shareholder?

Posted: Wed Oct 09, 2019 12:29 pm
by StandingRock
Dividends are paid on a per share basis. You are paid a dividend on every share you own. If you own 100 shares of Company B, and they declare a dividend of 1 dollar, then you get paid 100 dollars.

Re: How does corporation distribute dividend to its shareholder?

Posted: Wed Oct 09, 2019 1:50 pm
by Stinky
Welcome to the Forum! Glad that you posted your question.

The Board of Directors of the corporation declares the dividend. Usually, the dividend is announced through a press release and on the corporations web site, but not to individual shareholders.

Re: How does corporation distribute dividend to its shareholder?

Posted: Wed Oct 09, 2019 3:36 pm
by dbr
ZengGuo wrote:
Wed Oct 09, 2019 12:21 pm
Do amount of dividend paid to shareholders depends on how much share they own? for example, if you own 1% of the share, you will get 1% of the entire dividend. Do every shareholder will get dividend, or only those shareholders who owns the most shares of corporation. When corporation decide to pay dividend will they notify every single shareholders? Who decide how much dividend should be paid to shareholders?
If you own 1% of all the shares, you will get 1% of a the entire dividend payout. Every shareholder is paid some amount of money in proportion to what fraction of the shares they own. Shareholders who own the most shares will also get the largest fraction of the entire dividend paid out.

There are some things about the words being used here. When people invest they buy shares (plural) in the company. A company may have issued many shares. Apple has about 800 million shares in the market. If you own 100 shares of Amazon you would own .0000125% of all the shares. You would therefore receive .0000125% of the total dividend paid out.

The word dividend usually refers to the amount paid per share. Apple last paid a dividend of $0.77 per share paid on 8/15/19. If you owned 100 shares of Apple you would have been paid $77.00 on that date. In 2108 Apple paid out $2.82 total in four payments. If a share was worth around $230, then the dividend per share would have been about 1.2% of the price of a share. That number is called the annual dividend yield and it can change depending on the dividend and on the price of the stock. The dividend is set by the company but the price of the stock is determined by the market.