How much of a dividend do you receive on a stock?

Question

In other words, if you own a stock thats worth $100/share and you own 10 shares of that stock, how much of a dividend do you receive, and how often, if the dividend rate is 5%? Lets assume the stock stays at $100 for an entire year. Thanks.

Thanks to everyone for all the input.

Answer 1

Well, there are a few problems with your question. But let me try to answer it as completely as possible. First, the amount of the dividend doesn't change with the stock price, nor is it ever guaranteed. Stocks typically pay dividends quarterly, so you might receive something every 3 months, but there's no requirement that they do that, it's just traditional. If you're getting a 5% dividend yield on a $100 stock, that means you'd get $5 per share, so if you have 10 shares, that's $50. But that's the amount you'd get per year, and if they pay quarterly, then you'd get $12.50 per quarter.

The dividend yield will change when the price goes up or down. The dividend yield is not a guaranteed amount. It's just a calculation that is made to estimate what kind of return you're getting. The dividend will only change when the company decides to increase it. Many companies increase the dividend every year or two, but that's also not guaranteed, and there's no way to know when they will.

Answer 2

$100 a share @ 5% is $5 per share per year. Companies typically pay dividends quarterly, so you'd get $1.25 per share per quarter. If you have, as in your example, 10 shares, then you would get a check for $12.50 every 90 days.

However, a stock's price does not determine dividend payments. Many companies, both profitable and not, pay no dividend at all. What we usually see is that a company will pay dividends that are level for 4 quarters, but are increased a few cents once a year. Dividend stability, and increasing dividends over time, are things a company likes to brag about.

Go to the website of any major company, like Procter and Gamble (PG), General Electric (GE), Exxon-Mobil (XOM) and click on a tab that looks like Investor Information. They all put their historical dividends on their websites, and their annual reports, too.

Sometimes, if a company has extraordinary profits, they may also pay a one-time dividend. Microsoft (MSFT) did this a year or so ago.

Answer 3

The stock price has no real tie in with amount of dividend
and there is no percentage paid.

Dividends are set by the companies directors and the price is published and dividends are usually paid quarterly.

So one share of stock may get 0.10 per share per year, paid quarterly @ 0.025 per share every 3 months, usually, mar 31, june 30, sept 30, dec 31.

The percentage comes from the "yield" as quoted at any time, which is the dividend paid in the year devided by the stock price when the yield is quoted multiplied by 100

So if the stock cost today , $10 and the dividend is 0.50/year
the dividend yield is 5%

but if the stock goes up to $12 and the dividend stays the same , the yield drops to 4.17%

Answer 4

Dividends are expressed in dividends/share. Dividends depend on how many shares you have.

In your example the dividend is $5 per share. The stock could go up to $200 per share, the dividend would still be $5 per share. It will stay at $5 until the board of directors of the company changes the amount.

In most US companies, dividends are paid quarterly, So in your case, you would receive $1.25 per share every three months.
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Answer 5

Each company decides its own dividend policy. Typically young firms do not pay dividends. They need to put all of their earnings back into the company to fund growth.

When firms become mature, they usually generate extra cash. If they want to return that cash to investors, they have several choices. The two main ways to return cash to investors are to repurchase shares and to declare a dividend.

In the past, many firms preferred to repurchase shares. Investors who want cash would sell their shares back to the firm and pay capital gains taxes on their profits. Those who did not want the cash would hold on to their shares -- and would now own a slightly higher percentage of the firm -- since there are fewer shares.

A lot of firms avoided paying dividends because they were taxed at the ordinary tax rate. However, if there is a holding company, they would often pay large dividends because corporations got a tax break on dividends. Consequently, a lot of the firms that pay dividends are firms like banks that are owned by a holding company.

A change in the tax law a few years ago made it more advantageous for individuals to receive dividends. More firms started paying dividends when the low changed.

You can look at Yahoo! Finance to see what a given company pays in dividends.

Answer 6

Dividends are paid in dollar and cents per share, not percentage.

Take the dividend amount and multiply by 10.

Answer 7

You must know where the 5% is coming from. Is it 5% of net income? Please take a look at the sites listed below for additional information.