Dividend – an alternative to small gains from bank deposits.

Many investors in the world and now also in Poland buy shares of companies and treat them as a long-term opportunity to earn. Not only at a rising price – it is not always so – but often at the dividend. What is this specific reward from the company’s profit?

Dividend (Latin dividendum) is a portion of a company’s net profit (after income tax) for a sole shareholder or stockholder, or to split between shareholders or stockholders. The dividend is calculated on the basis of the company’s annual financial result. The amount of the dividend and the date of its payment is determined by the general meeting in the case of a public limited company or a shareholder meeting in the case of a limited liability company.

The conditions for paying dividends in equity companies are:

– end of the financial year (KSH allows, however, shareholders or stockholders to pay advances to anticipated dividends),

– the preparation of the financial statements, and the audited entities also audited by the auditor, but the auditor’s opinion must be at least “unreservedly” or “with reservations”

– approval of the financial statements by the general meeting (or the shareholders’ meeting);

– make a profit distribution decision and pay out of a dividend.

Dividends can be paid out of the net profit of the last financial year or retained earnings from previous years, as well as from supplementary capital or reserves (provided that they arise from the company’s profit). Dividends usually take the form of cash, but they can also be paid in a tangible form (eg shares, real estate, etc.).

It can be paid in the following forms:

– money,

– other assets that the entity owns.

The amount of dividend indicates the company’s horizon for the coming months and its investment plans. If the company’s management recommends a lower dividend, this means that most of the profits will remain in the company. This usually means that these funds will be used for further investment and consequently strengthening the company’s results. For an investor, it is important whether the company pays dividends on a regular basis and in what amounts (see dividend policy). These data can be found in the company’s financial statements.