Annual general meeting
A decision is made on the distribution of a dividend and its amount.
What are dividends? How do you use them to build up wealth?
Dividends are profit distributions from listed companies to investors who hold the shares.
Decisions on whether to distribute profits are taken at annual general meetings.
A high dividend yield can be used to build passive income.
Investors provide equity capital to a company by purchasing shares. The inevitable price fluctuations of shares can be cushioned by dividends. For investors, the distribution of dividends is very worthwhile, as the capital can be reinvested. It can also be used to build up passive income.
With a dividend, a stock corporation gives its investors a share in its profits. This happens with an annual distribution, also called dividend. By buying shares, you receive dividends.
But when exactly are you entitled to dividends?
Explained in more detail using the following timeline:
A decision is made on the distribution of a dividend and its amount.
Last day to buy with entitlement to dividend.
The relevant date for the deposit balance at the time of receipt of the dividend payment.
Dividends are paid out to shareholders.
That is why the so-called cum day is important.
While companies based in the DACH region often pay dividends once a year, distributions can also take place on a monthly or quarterly basis. The latter is often the case with listed US companies. Dividends are particularly interesting for investors who want to build up their assets sustainably and over the long term. Dividends therefore play a significant role in your wealth accumulation. In addition to a long investment horizon, investors should also have a high degree of risk awareness. The effect of a higher return due to long-term planning is considerable.
💡 Tip
With the screener in the Bavest platform, you can search for stocks with a high dividend yield and add other filters that match your investment criteria.
Dividends are a form of profit sharing. And what is the dividend yield? Some people compare this to interest. It is the dividend per share divided by the price per share. It is also a company's total annual dividend payment divided by its market capitalization, assuming the number of shares is constant.
Formula
Dividend yield (in %) = dividend / share price x 100
On average, companies in Germany pay out around 40 percent of their profits as dividends to their investors.
There are different ways in which dividends are paid out, important: The company usually decides on the way dividends are paid out.
In the case of cash dividends, the dividend is paid directly into the investors' settlement account.
In the case of stock dividends, the dividend is paid out in the form of additional shares. In the case of foreign shares, this is a great advantage, because no withholding tax is incurred compared to the cash dividend.
Here, one receives non-cash assets from the company. A well-known example is the dividend in kind at Lindt & Sprüngli: Here, the dividend consists of a suitcase full of chocolate.
Here now are a few examples, with stocks that have a high dividend yield.
This means that dividends are a great way to build up passive income or to compensate for poorer market phases and the associated returns with dividends.
Disclaimer: KNo investment advice or purchase recommendation
Which key figures should you know? How do you use them in stock analysis?
