While a small proportion of the Indian population is connected to the financial market, that small population has been growing at a fast pace as the population becomes educated and the old generation is replaced with a new generation that feels connected to the financial market and prefers the same to grow their savings. The momentum and flow of funds are set to witness an upward tick.

Although every investor in the stock market usually knows the concept of buying low and selling high, there are other ways to earn from a stock. Other corporate actions are dividends, bonuses, buybacks, and lastly, stock appreciation.

In this, we will list stocks that will be going ex-dividend in the coming days and make you aware of the concept of a dividend.

Also read: Why You Should Invest in the Stock Market

What is a dividend?

A dividend in financial markets is a payment made by a going concern to its shareholders as a reward. A company can distribute dividends in the form of cash or assets. The board of directors makes decisions that need approval from shareholders. Dividend declaration procedures differ among companies. Some firms do not support rewarding shareholders with dividends. They engage in other business operations such as buybacks and bonuses. However, a firm doesn't need to pay dividends. The dividend is often a portion of the company's profit distributed to its shareholders.

What effect does a dividend have on stock prices?

Dividends have a substantial influence on share prices by offering income to shareholders and reflecting a company's success. Investors value constant and increasing dividends, yet the stock price decreases on the ex-dividend date because dividends are deducted from assets. Consistent dividends attract long-term investors, as they represent financial health and stability. The influence of dividends on share price relies on a company's development potential, with high-growth corporations having a limited impact or negative impact. Management's confidence in future cash flows and profitability is vital for investors, since decreased or canceled dividends can cause a dramatic decline in share prices.

What is the Ex-dividend date?

The ex-dividend date is the date a company's stock begins trading without a dividend, and those who acquire on or after the ex-date are not entitled to the impending dividend payment. Key dates related to dividend payments include the declaration date, record date, ex-dividend date, and payment date. The ex-dividend date happens 1-2 days before the record date, while the payment date comes a few weeks following the record date.

Important terms related to dividend distributions:

• Declaration date: The day on which the company's board of directors announces the dividend. This is when the dividend amount and payment date are announced.
• Record date: The date used by the corporation to establish which shareholders are eligible to receive the dividend.
• Ex-dividend date: The first day that the stock trades without the impending dividend. Typically 1-2 days before the record date.
• Payment date: The day on which the corporation actually delivers the dividend payment to shareholders. Typically a few weeks after the record date

Stocks going Ex-dividend in coming days

Name of stocks that would be going ex-dividend in coming days are Hero MotoCorp Ltd, Life Insurance Corporation (LIC) of India, NHPC, NALCO, and many others will others will trade ex-dividend in the coming week.

To get updates on all the corporate action in one go, visit the Moneysukh Market section.

Calculations related to dividend

Dividend yield: This is calculated by dividing the annual dividend per share by the current stock price. It shows the percentage return an investor can expect from the dividend payments alone. A higher dividend yield generally indicates a more attractive dividend stock.

Dividend yield = Annual dividend per share / Current stock price

Dividend payout ratio: This shows what percentage of earnings the company is paying out as dividends. A lower payout ratio indicates the dividend is more sustainable and there is room for future dividend growth.

Dividend payout ratio = (Total dividends paid / Net income) * 100%

Dividend coverage ratio: This complements the payout ratio by showing how many times a company's earnings cover the dividend payments. A higher coverage ratio indicates a more secure dividend.

Dividend coverage ratio = Net income / Total dividends paid