How Do Share Dividends Work?

A dividend is a distribution a company may make to shareholders from profits or reserves. Dividends are not guaranteed, and both the amount and timing are decided under the company's governance arrangements.

Who receives a dividend?

Eligibility depends on being recorded as the holder under the relevant timetable. The ex-dividend date, record date and payment date each serve a different purpose.

Cash or reinvestment

Shareholders may receive cash into a nominated bank account or, where offered and elected, participate in a dividend reinvestment plan. Choices and deadlines are administered through the registry.

What are franking credits?

Australian companies may attach franking credits reflecting company tax already paid. The investor's ability to use them depends on tax circumstances and applicable rules. Seek tax advice.

Why dividends become unclaimed

Payments can fail when bank details are closed, cheques are not deposited or the shareholder cannot be contacted. Over time, some amounts may be transferred to government unclaimed money systems.

Ready to take the next step?

Keeping a parcel solely for tiny dividends may no longer suit you. Explore whether donating the shares would create a better outcome.

General Information Disclaimer

This article contains general information only and does not constitute financial, legal or tax advice. Requirements vary between holdings, brokers, registries and personal circumstances. Consider obtaining advice from an appropriately qualified professional.