Question

Why is the timing of Dividends not as important as paying them?

Answer 1

Dividend is the return of investment to the equity or common stockholders

1. This type of investors does not expected a fixed rate of return on the invested amount

2. But this type of investors compulsorily expect some return on the invested amount.

3. Companies may declare this difference at any point of time in a financial year.

4. Investors just expect return on the investment but they doesn't expect at a particular point of time.

5. This is the reason why companies declare dividend at the end of the financial year and also sometimes in middle of the financial year on the name of interim dividend.

6. To satisfy the investors companies declare dividend at any point of time but they will surely pay dividend on the investment.

7. the main intention of the investors in investing common stock is to get capital appreciation but not written in the form of dividends. due to this the investors also least bothered about the timing of dividend but the expected minimum return on investment in the form of dividend.

8. All the above points we can say company may deviate from the payment of dividend regular point of time but they cannot eliminate the payment of dividend. If they eliminate the payment of dividend there will be a downfall in the share price of the organisation. So this gives us why the payment of dividend is more important than timing of dividend.

In simple words we can say that the investors give preference to get income in the form of dividend but they do not give more importance to get dividend regular point of intervals or regular time intervals.

This is the reason why timing of dividend does not have as much as importance of payment of dividend.

These are all information required to solve the above given question.

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