Overview

Main Menu Name: Dividend

Provides a month-to-month report on the income flow for up to 20 investments. It also calculates the percentage of the year's income received each month.

In this article:

• Background
• Why should I use this calculator?
• Getting Started
• Entering Data
• Results

Background

Common stock represents an equity position in a corporation. Stockholders are entitled to a proportionate share of the corporation's "C/P/A," that is, Control (through voting rights), Profits (through dividends), and Assets upon a sale or liquidation.

The size of a corporation's dividend is based primarily upon two factors: the earnings of the corporation and the firm's need (or the shareholders' desire) to retain and reinvest some portion of profits in company operations. Publicly traded corporations usually pay out a significant portion of each year's earnings, while closely held corporations typically retain a higher percentage to shield shareholders from double taxation.

Dividends may be paid in cash or in stock. When a stock dividend is paid, investors physically receive more shares based on a percentage of the stock they own. This means an investor with 100 shares of stock in a company will have 112 if there is a 12 percent stock dividend. Funds from the corporation's retained earnings account are then transferred from retained earnings to the capital stock account.

Dividends are fixed on the "date of record" and are then paid only to those who owned stock on that date. The day following the date of record is called the "ex-dividend" day. Starting on the ex-dividend day, the stock trades without the dividend, and the stock's price will often drop by the amount of the dividend. Actual payment of a dividend is sometimes weeks after the date of record.

No dividends may be paid on common stock in any year or cumulative years in which the full dividend has not been paid on preferred shares.

Debt securities can be found in two general forms: short term and long term. Short-term debt issued by corporations in the form of "commercial paper" and is sold at a discount from its face value. Upon maturity, investors receive the full face value amount. Most commercial paper matures in less than nine months. CDs, certificates of deposit, are another commonly owned type of short-term debt. These are deposit liabilities of a bank or savings and loan. CDs often mature in less than a year and differ from commercial paper because they are interest bearing and not sold at a discount.

Bonds represent the long-term debt of corporations. They generally pay interest semiannually and repay the principal at a predesignated date, from 5 to 30 years from issuance.

Why should I use this calculator?

• Monitor and evaluate the income received from a portfolio of securities.
• Compare various issues as to timing and amount of income.
• Evaluate the impact to potential purchases on monthly cash flow.
• Record income received in the form of rent or any other predictable stream of cash flow.

Getting Started

Common stock represents an equity position in a corporation. Stockholders are entitled to a proportionate share of the corporation's "C/P/A," that is, Control (through voting rights), Profits (through dividends), and Assets upon a sale or liquidation.

The size of a corporation's dividend is based primarily upon two factors: the earnings of the corporation and the firm's need (or the shareholders' desire) to retain and reinvest some portion of profits in company operations. Publicly traded corporations usually pay out a significant portion of each year's earnings, while closely held corporations typically retain a higher percentage to shield shareholders from double taxation.

Dividends may be paid in cash or in stock. When a stock dividend is paid, investors physically receive more shares based on a percentage of the stock they own. This means an investor with 100 shares of stock in a company will have 112 if there is a 12 percent stock dividend. Funds from the corporation's retained earnings account are then transferred from retained earnings to the capital stock account.

Dividends are fixed on the "date of record" and are then paid only to those who owned stock on that date. The day following the date of record is called the "ex-dividend" day. Starting on the ex-dividend day, the stock trades without the dividend, and the stock's price will often drop by the amount of the dividend. Actual payment of a dividend is sometimes weeks after the date of record.

No dividends may be paid on common stock in any year or cumulative years in which the full dividend has not been paid on preferred shares.

Debt securities can be found in two general forms: short term and long term. Short-term debt issued by corporations in the form of "commercial paper" and is sold at a discount from its face value. Upon maturity, investors receive the full face value amount. Most commercial paper matures in less than nine months. CDs, "certificates of deposit," are another commonly owned type of short-term debt. These are deposit liabilities of a bank or savings and loan. CDs mature in less than a year and differ from commercial paper because they are interest bearing and not sold at a discount.

Bonds represent the long-term debt of corporations. They generally pay interest semiannually and repay the principal at a predesignated date, from five to 30 years from issuance.

Entering Data

1. Name:  Enter the name of the client.
2. Date:  Enter the date of the analysis.
3. List of Investments:  Click New to enter a new investment. Click Add to make changes to existing investments. Click Delete to remove an investment from the list.

Results

The program calculates the amount of income received from investments on a month-to-month basis, the percentage of annual income received in each month, and the total income received from each listed security.