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Tags: finance, stocks, accrued dividends
 Investing in stocks is one good way of making additional money. You are putting your money in good use when your investment is making high returns. When you become a shareholder in a corporation, you are entitled to a dividend. However, not all the time you are entitled to receive it.
There will be times when dividends are declared but will not be distributed. But don't you worry because you'll nevertheless receive them in the form of accrued dividends. As a shareholder, you must be aware of your rights and privileges including the right to receive dividends. Actually, a dividend is a payment made by the corporation to its stockholders or shareholders.
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In order for the stockholders to receive it, the said corporation must be earning. It’s not appropriate for the corporation to declare it if it's losing. However, having a net income does not always result to a dividend declaration. Sometimes, corporation uses the money for the growth of the business.
For example, the corporation can use the money for a major expansion program or purchase machinery and equipment needed in the operations. It will still depend on the Board of Directors whether they will give dividends to a shareholder or not. Accrued dividends will arise when for a given year, no dividends were paid.
It’s either, the corporation uses the money for other purpose or there’s no more cash left for the shareholders. You can receive it when the corporation has decided to declare one. Generally, you have to remember certain dates connected with its payment. First is the date of declaration. In that date, the Board of Directors of the corporation had declared payment.
If you haven’t received any dividend for say 5 years, you will be receiving an amount equivalent for the past 5 years. Second is the date of record- you will have to register in order to receive it. Only registered stockholders will receive the dividend they deserve. That’s why, in case you will hear any declaration, make sure to register with the corporate secretary.
You will realize all your accrued dividends once you’ve registered in the books. Actually, they are earned already though not yet declared nor paid. And lastly, the date you’ve been looking forward to is the date of payment. Corporations will either mail checks to shareholders or to brokerage firms who handle investments for other people.
The accrued dividends can also be in many forms. The usual is in the form of cash. Most shareholders prefer this because cash is very liquid. There is property as well as stocks too. If you intend to receive property dividend, you will convert it into assets. You have the option of choosing between securities, products or even services- it’s really up to you.
Property dividend is the rarest option for shareholders though. Stock or scrip dividend on the other hand takes the form of additional shares. Your shares in the company will increase if the corporation will pay your accrued dividends. Investments in stocks can really be profitable to an investor in the form of dividends.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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