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Discuss the 4 types of dividends. Which of the 4 is used most often, and why?...

  • Discuss the 4 types of dividends. Which of the 4 is used most often, and why?
  • What may happen to a company’s share price when dividends are announced or paid? Why do you think this is so?
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Answer #1

There are four types of dividend in general-

A. Cash divisions are those dividends which are generally payable in cash from the company.

B. Stock dividend will be those dividend which will be compensated through issuance of the stock by company

C. Hybrid dividend is a combination of both cash dividend and stock dividend.

D. Property dividend are generally non monetary dividend but they do have monetary value.

Cash dividend is generally the most common form of dividend which is used by various company because it is very easy to announce cash dividend as the company will be trying to reduce the price of the share and then pay the dividend.

2. When dividend are announced, then the price of the company will generally be increasing in the market because this is a positive sign for various investors as company is making profits and it is distributing dividend and it is rewarding the shareholder.

when the dividend is paid out, then dividend are reduced from the share prices and that would lead to decrease in the share prices.

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