There are mainly three types of dividend. Interim Dividend, Final Dividend and Special Dividend. If you want to take advantage of dividend of any company, then it is necessary to have that share in your demat account on the day of record date.
If you are a stock market investor then you must have heard about dividend or dividend. Whenever it is discussed, various terms are used with it. Such as Special Dividend, Record Date, Ex Dividend Date, Interim Dividend, Final Dividend. In this article, we will tell you the meaning of all these terms so that you can take proper advantage of it in the coming days.
First is the dividend declaration date. It is the date on which the Board of Directors of a company declares the dividend. Two more dates are announced along with the day the company declares the dividend. These two dates are record date and payment date. The record date is the date on which the company sees who are the investors who have shares in the demat account.
Must have shares in demat account
If you want dividend benefit, then you should have shares in your demat account on the day of record date. For example, Company A declared dividend and September 20 is its record date. You will get the benefit of dividend only if that share is in your demat account on 20th September.
The X dividend date is before the record date
The ex-dividend date is one or two trading sessions prior to the record date. To avail the dividend, investors have to buy the shares before the ex-dividend date so that the shares remain in their demat account on the record date. It is important to understand here that when you buy a share in the Indian stock market, it reaches your demat account in T+2. Therefore, the purchase has to be made before the ex-dividend date. If you buy on the day of the ex-dividend date, the benefit of dividend will not be available.
What is interim and final dividend?
Apart from this, there are mainly two- interim and final dividend. When the company declares dividend for a financial year before the books of account are not closed, it is called interim dividend. These shares can also be withdrawn with the consent of the holders. Final dividend is the dividend declared by the company at the annual general meeting at the end of the financial year. This dividend cannot be withdrawn.
Dividend should be more than 5% of the closing price
Apart from these two types of dividend, there is also a special dividend which can be announced by the company at any time. According to the report of Zee Business, when a company declares dividend of more than 5 percent against the stock price, then it is considered as a special dividend. For example, on September 11, the closing price of a share is Rs 100 and it has declared a dividend of Rs 6 per share, then it will be considered as a special dividend.
