CHAPTER II
LITERATURE REVIEW
2.1.
Dividend
2.1.1.Dividend Definition
Dividend is
a fraction
of a
company’s
earnings
that
is
distributed
to
the
shareholder.
The remaining
fraction,
called
retained
earnings,
is
reinvested
into
the
company in the form of equity. Dividend may take a form of cash dividend and stock
dividend, or more indirectly—share buyback.
In
terms
of
the
time
of
payment,
there’s
two
kind
of
dividend.
The dividend
distributed
after
the
end
of
a fiscal
year,
which
sourced
from
the profit
of
the
fiscal
year,
is called
final dividend. A company may also distribute
interim dividend which
is taken from the current fiscal year’s profit.
The
stock
exchange
has
some
procedures
regarding dividend
payment
dates.
These dates are taken from U.S. Security and Exchange Commission (2010):
Declaration date: the date at which the amount of dividend and other dates
are announced.
This
is
usually
the
following
or
the
same
day as
company’s general meeting.
Cum-dividend
date:
an
investor
holding the
stock
from
before
to
beyond
this date will receive dividend payment. Also known as in-dividend date.
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