If you buy a dividend-paying stock and meet the eligibility requirements (determined by its dividend dates), you’ll receive dividend. The dividend pay-outs are issued on a per-share basis. For example, if an investor purchases one share of stock XYZ, which pays 1 Rupee quarterly, the investor will receive 1 Rupee for each share he or she owns, four times per year.
Dividends are most commonly deposited into a shareholder’s brokerage account. However, if an investor buys shares directly from a company itself (through a direct investment plan like a DRIP, for example), then the
dividends can be automatically reinvested to buy more shares. Investors may also choose to have dividend
cheques mailed to them.
Here are a few suggestions:
What is your reason for investing? If you would like to receive regular income while you invest then you should
invest in stocks that have a track record of regular dividend payment. If you pursue a purer value orientated
strategy then dividends are not so important. However, in some cases, a lack of dividend may alert you to a
value investing opportunity.
A company’s ability to pay a dividend depends on its ability to continue making profit. But because the future is
unknown, check the dividend payment history of a company going back as far as records go. If you can’t be
bothered with that, check at least 10 years’ worth of dividend payment history.
Dividends can only be paid when a company is in good financial shape and management is willing to pay a
dividend. Use screeners to check whether a company pays dividend whilst taking account of the health of their