Q4 results out: Understand dividends and Its Importance

As companies release their quarterly report, for corporations. Many companies Q4 provide their shareholders with dividends.  

Dividends are payments or cash rewards typically distributed quarterly or annually to the company's stakeholders out of its profits. The firm's board of directors decides the dividend declaration date and payout percentage.  

An Interim Dividend is an annual general meeting that publishes final financial accounts. Interim dividend payment necessitates shareholders’ approval; the company’s board of directors declares it. 

Indian companies often pay dividends to shareholders, especially well-established ones. Investing in dividend stocks can generate income through reinvestment. For example, Infosys declared a final dividend of Rs 22, while Wipro's profit rose by 25.93% to Rs 3,569.60 crore. 

Let's look at the source of income for many investors to combat the adverse effects of the financial market effectively.  

Dividends provide investors with a reliable income for their shares, but companies are not obligated to pay them. With technological advancements, money-making has become easy.  

Dividends regain value during market fluctuations, making them reliable for capital protection. Adding equities can diversify risk potential effectively. 

Investors receive dividends, which they can use for personal expenses or reinvest in the same stock. Leading to consistent profits through dividend compounding, known as 'dividend capitalisation.' 

Investors face fewer losses during stock price declines, with dividend-paying stocks often outperforming their peers in bear markets.  

Dividend stocks can help investors combat inflation, typically yielding returns exceeding inflation rates, allowing profits to be reinvested. 

Dividend yield represents the return to show how much a company pays out in dividends each year to its stockholders. Higher dividends indicate the company's financial stability and good investment income.  

The cash dividend per share has to be divided by the market price per share multiplied by 100. For example, a company with Rs 200 declares a dividend of Rs 20 per share. The stock dividend yield is 20%.