1. What is dividend? Dividend is the sharing of (part) profit of the company with the shareholders of the company.
2. A company generally declares dividend once or twice in a financial year.
3. It is not mandatory for a company to declare dividend. A company may decide to keep the entire profit with it and utilise it to increase the level of its operation or to diversify.
4. A loss-making company doesn't declare dividend.
5. Dividend is calculated on the face value of a share. Market value of a share doesn't have any bearing on the dividend declared.
6. However, whenever a company declares dividend, market value of its share increases. After disbursement of dividend (after the closing date), the market value of the share goes down to some extent.
7. Now 100% dividend means, if the face value of a share is Re. 1/-, a single share will bring a dividend of Re. 1/-. So, if a share-holder holds 1000 shares of the company of face value of Re. 1/- of each share, he/she will get a dividend of Re.1x1000=Rs. 1000/-.
Caution: Explosive. Handle with care.