Is it possible to have a negative dollar amount of dividends received for owning stock during the...

Question:

Is it possible to have a negative dollar amount of dividends received for owning stock during the year?

Dividends:

Dividends are distributions of earnings made by companies to their shareholders. Dividends may be in the form of cash or other capital such as additional dividends. A liability is created on the day that dividends are declared. When dividends are paid, the liability is removed and the appropriate capital account is credited.

Answer and Explanation:

When investors purchase stock, they hope to earn returns through capital appreciation and/or dividends. It is important to note that stockholders are not responsible for any additional payments to the business after purchasing stock. In other words, a stockholder will never be required to pay more into the company than the price paid to purchase stock. Thus, since a stockholder cannot be in debt to the company for dividends, dividends received can only be positive.

Financial Disclaimer: The information on this site is for academic purposes only and is not a substitute for professional financial advice.


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Cash Dividends & Dividend Payment

from Finance 101: Principles of Finance

Chapter 16 / Lesson 1
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