What are "dividends"?

Company profits can be distributed to shareholders, proportional to the number of shares held.

The part of the profit distributed to shareholders constitutes dividends. 😊 

Definition and types of dividends:

Dividends represent "part of the profit of a joint-stock company (S.A.) that belongs to each shareholder at the end of each financial year, in proportion to the shares they hold".  📑 

Dividends can be of several types:

❶⠀Dividends paid in cash: these are dividends that shareholders receive in cash;

❷⠀Dividends paid in shares: these are not dividends, but can be viewed as such, since the company's profit is transferred to shareholders in the form of shares.

How are dividends calculated?

The company's General Assembly decides what part of the profit is distributed as dividends. This sum is divided by the total number of shares, resulting in the dividend per share.

Each shareholder calculates their dividends to be collected by multiplying the dividend per share by the number of shares held. 😉

How are dividends taxed?

Dividend tax remained at the percentage level from the year 2023, namely 8%. The individual is not obligated to declare and pay this tax. This is a tax withheld at source by the company that distributes and pays the dividends.

Advantages and disadvantages of dividends:

➤⠀Advantage: shareholders directly benefit from the profits of the companies.

➤⠀Disadvantage: by distributing dividends, the value of a company's stock decreases by an amount that may be greater or less than the value of the dividend.