Fundamentals & valuation
What is Dividend?
Also called: Dividend yield
Hinglish mein padhein: Dividend kya hota hai?
A dividend is a share of profit paid to shareholders in cash. Dividend yield is the yearly dividend divided by the share price.
To receive a dividend you must hold the shares at the end of the record date; buying on or after the ex-dividend date doesn't qualify. The price usually drops by about the dividend amount on the ex-date.
In India dividends are taxed at your income-tax slab rate.
Example
A ₹10 dividend on a ₹400 share is a 2.5% yield.
Related terms
- Ex-date and record dateThe record date decides who gets a dividend, bonus or split. With T+1 settlement, the ex-date is the same day as the record date.
- Free cash flowFree cash flow is operating cash flow minus capital expenditure — the cash a business generates after investing to maintain and grow.
- Share buybackA buyback is when a company repurchases its own shares from shareholders, usually at a premium, reducing the number of shares outstanding.