Dividends... Needs Guidance.

[Tamimi 10]

Hello guys,

 

I just started swimming in Balance Sheet reading. But I had difficulties to understand the term "Dividends". In the attached pictures for AZZ , I noticed that the company has given away "0.5" as dividends. Yet, I do not notice any remarkable change in the share amount for the company. Correct me if I am mistaken. However, What I have understood is that if we have "0.5" as dividends per share.And the total amount of shares is "25 million". We will end up with ( 0.5 * 25million = 12.5 million) . So the new total of shares will be (25m + 12.5m = 37.5 million shares.)

 

 

But still the company's share has incremented from 25m to 25.2m ONLY !!!!?

 

Any elaboration or correction ??

[trader54 10]

Hi Tamimi. The .50 you are looking at is the dividend rate. In other words the dividend is 50 cents/share. The 25.0 is the total common shares outstanding, the Treasury shares are shares reaquired by AZZ, and are held for resale. The basic Weighted shares reflects the Common shares outstanding, and the Diluted shares deal with all issuances of common shares which can include stock warrants and options. The company's calculation of the dividend is then based on a percentage of diluted weigted shares.

[Tamimi 10]

Thanx for your response.

 

Which criteria reflects the split or dividends in the amount of shares?

[trader54 10]

The 12.5 million you calculated in your question is not a share amount, but is a dollar amount AZZ will payout in dividends for the year. So the amount paid out will not actually change the number of shares. The determination of the dividend amount is based upon management's forecast of inflation, earnings, the amount of cash available among other factors. One other thing to note is the actual dividend yield which is 1.6% can change with the market price of the stock. (.50/$31.64). If the market price changes with a constant dividend rate of 50cents then of course the yield will change. The number of shares used is the diluted amount of shares if the diluted amount is a material amount. If not then the basic amount is used. The amount the company pays out will come from the retained earnings in the Shareholders Equity part of the balance sheet.