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WHAT IS A DIVIDEND(ALL YOU NEED TO KNOW ABOUT COLLECTING DIVIDENDS)

WHAT IS A DIVIDEND(ALL YOU NEED TO KNOW ABOUT COLLECTING DIVIDENDS)

No company has it all. Not even the multi-billion dollar companies. To get enough capital to help them run their business and serve customers better, they sell shares. These shares represent percentage ownership of the company. The more shares you have, the more claim you have in the company. Asides from this, the shares generate returns known as dividends. These dividends can be paid monthly, quarterly or yearly and the percentage per share is decided upon by the Board of Directors of the company based on the profit made by the company that year. These dividends can either be paid in cash, increase in stocks, or property ownership.

A notebook on a spring with the text DIVIDENDS

For instance, if Mr. Alli decides to buy shares worth 50,000 dollars in Orisumbare bottling company, that means that the unit price per share is 100 dollars. Mr. Alli is able to buy 500 shares in the company. At the time payment is being made, the interest per share is 50 dollars in addition to the 100 seed capital. How much is his dividend? How much profit has he made at the end of the year? Reflect on this.

Some other times, the company decides to pay back with stocks. So, the value of the stock the shareholder owns increases at the end of the year. Companies do these most times when they want to reinvest in the company. Thus, the profit made is reinvested in the company to make it better and increase profitability. Eventually, when the shareholder decided to sell his or her stocks, the money would have gained much value.

Some other times, the company pays back the investment in the company with properties or assets. This could come in cartons of products that can be sold, house gadgets, cars or land ownership, and the like. Whatever the property given, it’s not commensurate with the amount invested. It’s often worth more than the amount invested. So, persons desiring to acquire certain assets can choose to buy some shares in a company that pays back dividends in the form of assets.

But whichever method the company uses, the probability of getting profits from one’s investment especially on a long-term basis is high and it is a good and reliable way to build wealth. For more inquiries, please contact the Secure Capital Team.

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