Types of Dividends
A company can pay dividends in many different forms. The most common form of dividend payment is cash dividends. Let’s take a look at the different forms of dividends:
Cash Dividends: In its most common form, a company may decide to pay dividends in the form of cash based on a schedule. Cash dividends can be in the form of regular dividends, special dividends, or liquidating dividends. Learn more »
Stock Dividends: In this case, the company pays dividends in the form of new stocks, rather than cash. Learn more »
Stock Splits: In this case, the company decides to split each share into multiple shares. A 2-for-1 stock split means each old stock is split into 2 new stocks. Learn more »
Reverse Stock Splits: Reverse stock splits work exactly opposite to stock splits. Instead of splitting shares, multiple shares are combined into fewer shares. For example a 1-for-2 reverse stock split means 1 new share is issued for every two old shares. Learn more »
Each of these types of dividend methods has different impact of the shareholder value and the company. These dividends also impact the financial ratios of the firm. We will discuss each of these methods in detail in the following articles.