To An Investor, A Dividend Is A Valuable Thing!Summary: This section of the site looks at the way companies pay a dividend, how that payment is viewed by the stock market and investors and the impact on valuation. Clearly, dividend policy is very important to the market - and it should therefore be important to us all! There are a number of ratios based on accounting methods which are used. These can help to estimate the future dividend flow from a stock. In the UK, for example, they are usually paid every six months. The first is known as an interim dividend, whilst the second is known as the final dividend. These payments can be the same size or of different amounts. If the interim and final dividend are for different amounts though, it is usually the final which is the larger sum. Since dividend payments from a holding can be a large or at least significant portion of long term returns, it is useful for an investor to gain a working knowledge of this subject. The return on the majority of collective investment funds is not usually impacted much by individual corporation's dividend policies. However, there are investment funds (mutual funds / unit trusts / sicavs) that only select corporations that pay above average returns. These funds are designed to pay out a proportion of their income each year - and therefore are targeted at investors that need to draw an annual income. The following pages will look at the issue in more depth:
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