UK Dividend – Know Some Insights about Them

UK stock market is quite heavily based on their investors and returns of the companies. London Stock Exchange is the UK’s primary exchange has established itself as the Fourth largest stock exchange of the world. Today there are approximately 2,938 companies from over 60 countries is being listed on London Stock Exchange (LSE). LSE offers more trading in emerging markets exchange traded funds as compared to NYSE, deutsche Boerse and any other exchange of the world. UK Stocks are performing well and investors are making money in form of dividend paid by top companies. FTSE 100 indices is also important thing to mention. Some people misconfigure it as understanding it as a separate stock exchange in UK but actually it’s an indices which is updated on regular basis. It just lists top 100 companies according to their market capitalization in UK.

But have you ever thought what dividends are? Why they are being paid to investors? Also, can you take any benefit from them? Even deeper, Can companies take any benefit from them like tax relaxation or anything else which costs them less?  There are some insights about UK dividends to which investors are not likely to familiar. They are given below to better understand the concepts of Dividends in U

1. Dividends are being paid by public or private sector organizations which are listed on stock market when these organizations earns profit by performing well. After earning profit they have several options to use this profit either they can reinvest this money on their business or they can distribute it to their shareholders as dividends as a reward or to encourage their investment in the company.
2. UK Dividends are paid to only shareholders by the company not to directors and also they are payable out of post corporation tax profit simply meaning profit is calculated to declaration date and an corporation tax allowances is made before the final dividend amount is available.
3. A dividend may be of two kind as it may be an interim and it may be a final. Interim dividends are declared usually at the end of company’s financial year whereas final is declared at the year end.
4. Each company Credits a notional tax credit equal to 1/9 of the profit received by shareholders. Suppose a shareholder is going to receive $900 then company will credit notional tax amount of 100 to investor. Thus total taxable income becomes $1000 for an investor.