The word dividend is generally, though improperly, used to indicate both the annuity periodically due to the bondholders of a loan, and the variable share of profits pertaining to the shareholders of a joint-stock company.
Both stocks and shares are thus indiscriminately quoted on the market, either cum dividend or ex dividend. The payment of such dividend is effected on presentation of coupons or dividend warrants.
Both warrants and coupons are but orders of payment. The former, in the shape of cheques payable on demand, and therefore transferable by endorsement, are delivered or sent by post to the holder of registered stocks or shares ; the latter are small slips attached to the original stock or share certificate to bearer.
Warrants sent by post are called post-warrants and, like coupons, may be paid in to bankers as money.
ADVERTISEMENTS:
The form of a stock coupon is somewhat different from that of a share coupon. The former bears on its face, besides the necessary marks, the amount of interest due for the term mentioned therein and the date at which it falls due ; while the latter simply states that the bearer is entitled to a certain share of the dividend declared by the directors of the company for a certain period of time.
Extra dividends, over and above the proportional annual share of the company’s profits, are sometimes distributed among the shareholders, under the name of bonus or cash bonus, which consist of such sums as the directors may deem to consider as a surplus over the reserve fund usually kept out of the annual gains to meet unforeseen wants.