Once upon a time, the richest man in the world, John D. Rockefeller, said that there is only one thing that gives me happiness, and that is to see my dividends coming. Last year, the world's largest investor Warren Buffett received $324 million from Coca-Cola only through dividends. So what is a dividend? Which companies give dividends? And how can we get it? In today's video, we are going to know these three things.
Hello friends, welcome to our YouTube channel True Investing. Trueinvesting.in is our blog, which is based on investing. If you are interested in investing and want to learn investing, then do visit our blog.
So friends, let's know what dividends are. We saw in the video on the share market that when we buy a share, we only get profit in two ways. First, by selling the purchased share at an increased price.
And second, from dividends. Friends, dividends are called Labhans in Hindi. The two words that you can see in this are Labh and Ans.
We call Labh a profit and Ans a part. So dividends means a part of the profit. Yes, friends, dividends means nothing but a part of the profit.
Every profitable company has two choices. Either they keep all their profits to invest in their business or keep some part of the profit and share the remaining profit among their shareholders. Friends, the same part of the profit that companies share among their shareholders is called dividends.
Let's understand this with an example. Let's assume that XYZ company has a profit of $12 million in 2018. And XYZ company decides to give a dividend of $0.06 on every share.
And invest the remaining profit in their business. So if there are 1000 shares of XYZ company in your teamate account, then you will get $60 in dividends. Now let's know which companies give dividends.
Friends, such companies always give dividends that are in profit. A company in loss never gives dividends. And most of the time, such companies give dividends that are very big and mature.
Because when companies are new and in the phase of expanding their business, then they want to invest all their profits in the expansion of their business. Because companies know that by investing today's profits in the business, they can earn more profits in the future. And it is the benefit of the investors.
Because as long as the company invests its profits in the right place and increases its business, its profit will also increase. And by increasing profits, we will have two benefits. First, the price of the shares we have bought will increase.
And second, if the company decides to give dividends in the future, then it will be much more than today's dividends. Because the profit will also have increased much more than today. Friends, it is important to note that whether to give dividends or not, is decided by the directors of the company.
If they feel that they can use profits in the expansion of their business, then they do not give dividends. And if they feel that it is difficult to expand the business, then they divide the part of the profits as a dividend among their shareholders. Friends, now let's know how we can get dividends.
We know that dividends are given by a profitable and mature company. So if we want dividends, then we have to buy shares of such companies that give dividends continuously. And you can easily get the list of such companies from the online search.
But friends, there are some dates to take dividends that we have to keep in mind. The first is the record date. The record date is the date on which your name should be in the company's record as a shareholder.
The company giving the dividend publicly announces the record date. If your name is not in the company's shareholder list on the day of the record date, then you will not get the dividend at that time. The second is the ex-dividend date.
The ex-dividend date is generally just one day before the record date. As soon as a company announces the record date, the ex-dividend date is set one day before that. If we want the dividends of a company, then we have to buy the shares of that company before the ex-dividend date.
And if we do not buy the shares before the ex-dividend date, then we will not get the dividend at that time. Friends, companies can give dividends many times a year. And every time the company announces a record date so that the public knows that if they have to take dividends, then how long will they have to buy the share.
So friends, this was our today's video on dividends. In this, we learned that dividends are a part of profit. Only mature and profitable companies give dividends.
