What is meant by a dividend

A dividend is a payment made by a company to its shareholders as a portion of its profits or retained earnings. It is a distribution of a company's earnings to its shareholders. Companies may issue dividends regularly, such as on a quarterly or annual basis, or they may choose to issue special one-time dividends. The amount of the dividend paid to each shareholder is typically based on the number of shares they own in the company. Dividends provide shareholders with a return on their investment and a way for companies to share their profits with shareholders. It represents the portion of the company's profits that it has decided to distribute to its shareholders, rather than keeping the money for reinvestment in the business.

Difference between dividend percentage and dividend yield:

The dividend amount is usually based on the dividend per share, which is the total amount of dividend paid divided by the number of shares outstanding. For example, if a company declares a dividend of INR 2 per share and has 100 million shares outstanding, the total dividend payment would be INR 200 million.

The dividend yield is calculated by dividing the annual dividend per share by the current market price per share, expressed as a percentage. Dividend Yield = Cash Dividend per share / Market Price per share * 100.For example, if a company pays an annual dividend of INR 5 per share and its current market price is INR 100, the dividend yield would be 5/100 x 100 = 5%.

The dividend percentage, on the other hand, refers to the percentage of the face value of a share that a company pays as a dividend. For instance, if a company pays a dividend of INR 5 per share with a face value of INR 10, the dividend percentage would be 50%.