Dividend is the share of profit distributed by company out of it’s earning to the company’s shareholders. It is basically percentage earning of shareholders out of their investment in a company.
Dividends are mostly paid annually but can be quarterly or interim too.
Brief Explanation Of Dividend warrant
Dividend are mostly in the form of cash and company has this right to either pay dividend to regular shareholders or make a decision to reinvest in the business. (Preference shareholders however receive their annual or quarterly dividend on a must basis, although then they do not have voting rights in Annual General Meeting AGM then)
Company pays dividend to its shareholder in a document form known as Dividend Warrant. It is more like an instrument by which a company pays cash (dividend) back to its investors, it is like a payment order through which dividend is paid more like a form of cheque.
A dividend warrant normally contains the following information:
- Name of the company.
- Exercise price (the price per share with which the underlying security can be sold or purchased).
- Details of shareholders.
- Unique Warrant number
- Bank Details.
- Dividend warrants are turned into cash just like a cheque
- You just need to deposit it with a filled bank deposit slip in the bank in your Bank Account.
- On expiry of warrant you need to fill the re issuance form and re issue the warrant from the company
- It also has an expiry date. It is normally valid for six months just like a normal cheque
- With the advancement in online banking system e-dividends have also been introduced with which (if you sign up) the amount is directly transferred to your bank account with an e-mail alert.
- It is very liquid (when received) and can readily be converted into cash.