Topic14_dividends[1]

Topic14_dividends[1] - Thomas Moeller FINA 30153: Financial...

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Thomas Moeller FINA 30153: Financial Management 1 Topic 14 Dividends Objectives 1. Define types of dividends 2. Payment process 3. Do dividends matter? 4. Dividend examples
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Thomas Moeller FINA 30153: Financial Management 2 1. Types of dividends A) Cash dividend: cash payments to shareholders from earnings B) Stock dividend: new shares are issued and given to shareholders C) Stock split: each existing share of stock is “split” and the cash flow rights of each share are smaller after the split. E.g., if you held 100 shares, a 2:1 split would mean you would own 200 shares after the split
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Thomas Moeller FINA 30153: Financial Management 3 2. Payment process Dividends are usually paid quarterly Limited discretion in setting dividend amounts – e.g., debt covenants Declaration date: “Hey, we’re issuing a dividend of $X per share” Ex-dividend date: (a) stock has to be bought by this date for the investor to receive dividends; (b) shares now trade “ex dividend” (versus “cum dividend” before); (c)
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This note was uploaded on 04/21/2008 for the course FINA 30153 taught by Professor Moeller during the Spring '08 term at TCU.

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Topic14_dividends[1] - Thomas Moeller FINA 30153: Financial...

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