Commonwealth Bank (ASX:CBA) has announced a dividend
Commonwealth Bank (ASX:CBA) has announced an interim dividend of $2.100 per share.
A dividend is a reward to an investor for investing their money into a publicly-listed company. It is a distribution of some of a company's earnings to shareholders, as determined by the company's board of directors.
Dividends can be paid at a scheduled interval such as monthly, quarterly or annually. The shareholder can decide to take the dividend in cash, or reinvest the dividend to buy more shares in the company.
Dividends can impact the price of the underlying stock in a number of ways.
Dividends are a major market signal for investors. If a company continues to pay higher dividends, shareholders are positive and the share price generally increases. If the company reduces or cuts its dividend, the share price might fall.
What is an ex-dividend?
An ex-dividend is a classification used to decide whether the dividend belongs to the buyer or seller.
Simply, if you own a stock before an ex-dividend date you will get the payment, but if you buy it later you will not receive the declared dividend.
When a stock goes ex-dividend the share price usually drops by the amount of the paid dividend to reflect that new shareholders aren’t entitled to the payment.