Dividend

A distribution of money from a company. Most investment companies try to pay dividends from income but they are now allowed to pay dividends from capital.

Dividend cover

Measures the number of times that a company can pay shareholders its announced dividend using its net income.

DPS or Dividend per Share

DPS is an abbreviation of dividend per share. It is the total cash cost of the dividend divided by the number of shares that are eligible to receive the dividend.

ZDP cover ratio / Zero Dividend Preference share cover ratio

The ZDP cover ratio / Zero Dividend Preference share cover ratio is an indicator of the likelihood of a split capital company being able to repay its zero dividend preference shares (ZDPs) when they fall due. The method of calculation varies from firm to firm but, for the purposes of producing our monthly sheet on […]

Special dividend

A special dividend is a dividend declared by a company that is a one-off – rather than declaring a larger than average dividend, a company will declare a special dividend alongside their regular dividend to emphasis to shareholders that this is unlikely to be repeated

Dividend reinvestment plan

Some companies operate dividend reinvestment plans that buy you shares with the money you would have got from a dividend. The idea is that it is easier and cheaper for you than getting the dividend and buying the shares yourself. Remember though that the taxman will still tax you as though you got the cash […]

Zero dividend preference shares

Zero dividend preference shares (ZDP) are Shares that will be redeemed at a fixed price at some defined point in the future (provided that sufficient assets are available). Their entitlement to the assets of the company rises in a straight line between their entitlement on issue and their redemption value. They are not entitled to […]

Yield – dividend yield or bond yield

For shares, yield is the relationship between the dividend and the share price or asset value, calculated by dividing the dividend by the share price or asset value and expressed as a percentage. Unless specified, “yield” probably refers to the yield on the share price. Managers may also talk about portfolio yield – the yield […]

yieldco

Yieldcos are companies that own tangible assets producing predictable cash flows – such as pipelines, toll roads, and renewable generation assets – that pass on the bulk of their income to investors as dividends

Growth investing

Growth investing – Investing in companies that are growing by more than the market appreciates A growth company is anticipated to grow at a rate equal to or greater than the average for the market. These companies generally pay little or no dividends, as the companies usually want to reinvest any earnings in order to accelerate […]

Value investing

Value investing – investing in companies where their shares are on cheaper valuations than the market values them at. Investor can make money when the markets “appreciates” the actual value of an undervalued company and the share price rises to the NAV or a premium. Value stocks can have higher dividend yields than growth stocks. The investor must […]

Glossary

Dividend