What are Dividends?

Dividends are a kind of reward paid to investors by the companies they are invested in. This can either be in the form of additional shares at a specific ratio, or a cash pay-out. The amount you receive depends on how many shares you own.

For example 

If you own 100 shares, a company may offer a dividend of three shares for every 50 shares you own, or you could receive a specific pay-out per share in cash. 

A dividend pay-out ratio looks at how much is paid out from overall profits, while dividend yield looks at how much is paid out compared to the share price. This is calculated using dividends per share divided by the share price. 

For example

If the dividends pay-out per share is R1 and the company is trading at R10 per share, the yield will be 10%. 

While other companies can only afford to pay investors dividends once a year, some are able to pay as much as quarterly, or even monthly. On the other hand, special dividends are paid out to investors on rare occasions or once in a while, depending on the company’s performance. 

If you own shares in a company that is paying dividends, these shares are eligible for dividends if they are bought before or on the last trading date, while those sold before or on the last trading date will not be eligible for dividends. These important dates are communicated with investors in advance of dividend pay-outs, including the payment date on which they can expect to receive the dividends. 

If you want to keep up to date on which companies are paying dividends, you can read our weekly updates.