The holding of shares in the stock market implies that the wearer to enjoy the benefits of share prices. Indeed, the stock used to recapitalize the company or companies and shore up their financial resources. Regularly or at the end of a fiscal year, a profit distribution is made and much of these is distributed to shareholders listed on the stock market. Thus, in addition to the statutory interest which is the first basis of allocation of profits and considered the “first dividend”, the shareholders will be entitled to dividends themselves. Finally, super dividendes and bonuses are eventually to be distributed, if the social benefits are important in terms of yield.

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In the past, actions were materialized by coupons, stamps that were to be detached to allow the wearer to enjoy the dividends from these securities. But today, through computerization, data on these older detachable coupons are scanned, recorded and transcribed immediately on behalf of the holder of the title or shareholder.

Overview of dividends

The portfolio of securities of a listed company includes stocks, bonds and various forms of the warrant. Among the revenue received by the holder of such shares dematerialized today, dividends are the most common. The rationale for the dividend is the fact that it is the direct product of the securities that constitute actions. Over the shares held by the holder are, the more revenue on the securities will be consistent. However, the dividend is a bonus payment of which is optional and it is not uncommon to find in practice that some companies keep paying for example super dividendes or “third dividend”.

However, the statutory interest or “first dividend” is essential to distribute to shareholders. That the General Meeting of shareholders which decides when the distribution of social benefits as well as cycles of distribution. Regarding the taxation of social benefits, including dividends, you should know that they are subject to income tax, with the optional withholding. In the system of income tax, you will benefit from tariff reductions several of which the first is 40%, followed by a general allowance and a tax credit mechanism, the tax credit. But whether you choose the income tax or withholding tax, the deduction will be made at source.

Dividend yield and tax credit

The notion of dividend is inseparable from those of efficiency and tax credits. At first, it is a reminder that dividends provide consideration for the financial support provided by the holder of the title. It is precisely this interdependence between the carriers and the company receiving the contribution that allows the exchange to operate thanks to quotes. In this scheme, the yield is the ratio between the share price and dividends to be distributed. This involves an assessment of the rate of dividends to be distributed on the listing and the market value of the share at the time of distribution of profits.

It is therefore normal that the yield is higher for companies heavily traded. However, it can also mean a weak share price which is then likely to distort the interpretation of the ratio of return. But generally, the yield is high when profits earned by the company are important and where the general policy of the listed company encourages shareholders. As for the tax credit, it is a tax credit that allows the company listed on the stock market to benefit from tax incentives such as the fact of not being doubly taxed. Thus, the burdens of society are relaxed, it may choose to convert the tax credit in dividends or bonuses to be distributed among shareholders.

System of payment of dividends

Today the remuneration of the detention of dividends is a digital and information technology and physical possession of coupons representing dividends is no longer appropriate. Once the Annual General Meeting endorsed the mode of distribution of profits and the Board of Directors of the Company determined the amount of dividends to distribute, we proceed to the payment itself. Two payment methods are available: the first and most common is the cash payment directly to the bank account of the holder of the title, by the company itself or through a stockbroker. The second method is less common: it is for society to pay you in your fictitious credits worth of additional shares, equal to the cash you would have collected. The benefit to society is that its cash position remains unchanged, however, this method has the disadvantage of diluting the benefits granted to each action. In addition, payment may be made at once or be divided into several installments.