When a company declares dividend, actually how does the company pays the $ to share holders?

The $ was paid to shareholders by deduction from its share price.
But, how does the company actually pay from its own cash?

dividend comes from company profits not share price

What??? Pay using profit. Alot of people think money drop from sky.

This post has been edited by kelvinfixx: Dec 12 2024, 09:57 PM

Shares price is adjusted after ex-dividend..

$$$ don't come from them..

Basics Investment 101 😁

But then, how cone its share price drop precisely same amount as the dividend?

This post has been edited by chinkw1: Dec 13 2024, 07:35 PM

hm....do you know why u r buying in into a counter and hoping the company share price to go up?
Share price doesnt goes up magically becoz of good news and speculation

-1 Apek and his wife bought a runcit, 10 years ago, they used USD 50K to start the business
-from 2014 till 2019, his business net income is USD 50K/year
-(Net Cash USD 50K) ideally, each of them get 25K/year.
-Apek smart, he CEO, he say each get USD 10k. Extra 30K put in as CAPEX to the business
-on 2015, Apek decide buy next door shoplot, estimate to spend 30K each year for 5 years(This include refurbish and add in more product line)

We take Year 2015 as an Example
-(Dividend yield 40%)the runcit pay in total of 20K dividend/year
-becoz USD 50K/year earning is super good for a USD 50K shop, if he is to sell his shop, it is at PE Ratio 1.0. He talk so loud that manyak fren come ask if he wants to sell, They wanna pay him 200K.
-(Share price up x4) So at this point his Shop is value at 200k, which assume to be his Share price X4 already.
-in 2015, thinking the business is value at USD 200k. And he still earn usd 50K in 2015. So his PE ratio for End Year 2015 is stand at 4.0. Div Yield will be dropping to 10% in 2015

ada faham?
So ya, they use their net income/cash and pay according to they dividend payout policy. if there is such policy for the company
If rugi, likely no pay dividend, follow by their dividend policy jugak

This post has been edited by taitianhin: Dec 12 2024, 10:12 PM

share price will adjust on ex-date.

Share price RM1
Dividend declared RM0.10 (ex-date 13 Dec 2024)

On 13 Dec 2024 the opening will be RM0.90 (After ex-date adjustment)

I think you need to read more on dividend ex dates, entitled date etc.

And those basics....

Not all companies will drop. Some companies after paying dividends going going up. Going down is in theory. But in reality some goes up, some stays the same, some really good do down.

It goes down because the valuation must decrease as the company have less cash.

Get your facts rite..not profits but free cash flow .no wonder i3 standard