In today’s financial world, everyone is searching for secure investment plans. Dividend is one way through which a company shares profits with its shareholders in terms of cash, additional stocks, or otherwise. Whether you’re aiming to build passive income or grow wealth over time, dividends can play a pivotal role in your investment strategy.
What is a Dividend?
A dividend is a payment made by a company to its shareholders, usually in the form of cash or additional stock. It’s basically a way for companies to share a portion of their profits with the people who own their stock. When a company makes a profit, they either reinvest into a business or distribute the portion of that profit to shareholders as dividends.
The decision to distribute a dividend is made by a company’s board of directors.
How do Dividends Work?
The first part of the dividend process starts with the company. When a company makes a profit the board of directors decide to issue the dividend specifying the amount and types (cash, stock etc.) to be distributed. This decision is based on factors like the company’s financial status, future growth plan and business strategies. When a company declares a dividend, it specifies:
- Dividend per share: The amount each shareholder receives per owned share.
- Ex-dividend date: The cutoff date to be eligible for the next dividend.
- Payment date: When the dividend is actually paid out.
Types of Dividend
There are different types of Dividend offered by companies:
Cash Dividend
These are the most common types of dividends, paid in cash to shareholders. The company pays a specific amount of money per share.
Stock Dividend
Instead of cash, the company distributes a certain portion of shares to shareholders. This allows shareholders to increase shares without buying it.
Property Dividend
Instead of cash and stocks the company provides physical assets owned by a company such as inventory, real estate etc. It is rare.
Scrip Dividend
In this type of dividend the company does not pay cash immediately, but instead gives shareholders a promissory note and a written promise to pay the dividend at a later date.
Liquidating Dividend
A liquidating dividend is a special type of dividend paid during a company’s dissolution or winding up of business. While regular dividends are distributed from the profits of a company, liquidating dividends are a refund of the shareholders’ original capital investment
How to choose the best dividend stocks?
Choosing the best dividend stock is always confusing. While choosing the best dividend stocks one requires careful evaluation of a company’s financial status and history of stocks. Choosing the best stock which provides dividends over a time can grow a passive income.
Company History and Track Record
Look for companies with a strong history of paying dividends. Analyze the track records of the company which shows that the company values its shareholders and its business model.
Dividend Consistency and Growth
Stability is key. You don’t want a company that’s unpredictable with its payments. Consistent dividend indicates strong financial stability of the company.
Financial Health of the Company
Study their earnings, debt, and payout ratio of the company. A healthy balance sheet usually means reliable dividends.
Global IME Bank Dividend History
Global IME Bank has consistently been rewarding its shareholders every year with a mix of cash and stock dividends. The bank has maintained a strong dividend payout record, reflecting its commitment to giving back value to the investors.
Below is a year-by-year division of the dividends declared by Global IME Bank:
| Fiscal Year | Cash | Stock | Total |
| 2080-81 | 0.00% | 5.50% | 5.50% |
| 2079-80 | 8.00% | 1.00% | 9.00% |
| 2078-79 | 10.60% | 3.00% | 13.60% |
| 2077-78 | 3.50% | 10.00% | 13.50% |
| 2076-77 | 2.00% | 14.00% | 16.00% |
| 2075-76 | 12.75% | 12.75% | 25.50% |
| 2074-75 | 0.00% | 16.00% | 16.00% |
| 2073-74 | 10.00% | 10.00% | 20.00% |
| 2072-73 | 0.00% | 15.76% | 15.76% |
| 2071-72 | 0.00% | 23.00% | 23.00% |
| 2070-71 | 4.00% | 21.00% | 25.00% |
| 2069-70 | 0.00% | 15.00% | 15.00% |
| 2068-69 | 10.00% | 3.00% | 13.00% |
| 2067-68 | 5.35% | 6.67% | 12.02% |
| 2066-67 | 5.00% | 0.00% | 5.00% |
| 2065-66 | 0.00% | 0.00% | 0.00% |
| 2064-65 | 0.00% | 0.00% | 0.00% |
| 2063-64 | 0.00% | 0.00% | 0.00% |
| TOTAL | 71.20% | 156.68% | 227.88% |
Also shareholders are encouraged to check the Global IME Bank uncollected dividend page for uncollected dividends.
Conclusion
Dividends are not just a bonus, they’re a strategy. Whether you’re looking for passive income or long-term wealth building, dividend investing can be a great strategy. With a little research and some smart choices, you can build a regular income stream and grow your portfolio over time.
FAQs
1. How often are dividends paid?
Typically quarterly, but some companies pay monthly or annually.
2. Can Dividends Be Reinvested?
Yes! Many brokers offer DRIPs (Dividend Reinvestment Plans), automatically buying more shares with dividends.
3. Are Dividends Taxable?
Yes, the current dividend tax rate in Nepal is 5% for both resident and non-resident individuals.
