Dividends come from the company's operating profits. There has always been a debate about whether or not it is important for companies to pay dividends. We'll explain how much it does or doesn't matter after explaining exactly what dividends are and how they can be paid. We will also tell you about some of their advantages and disadvantages. There are different types of dividends. The first is called a regular cash dividend. This is the money that the company decides to give to shareholders. They are paid on a pro rata basis, which means they will receive it based on the shares they own in the company. It is usually distributed quarterly. For example, a shareholder owns 150 shares in a company that is LMN and bought them at £100 per share. If the company decides to distribute £15 per share to each shareholder, this person should receive £2250. However, dividends are taxable, so this means they will receive less than £2250. Extra dividend is a sum of money distributed exceptionally to shareholders if the company earns much more than expected. There is also the special dividend which is quite similar to the extra dividend, except that the amount of money is usually larger than the latter. They are handing out once since they are not regular. Shareholders receive the liquidation dividend when a company is or will be liquidated, and it is usually not taxable. The company may decide to buy back shares held by investors instead of paying dividends. The difference is that, unlike dividend payments, investor participation is not mandatory. The number of shares is reduced and they are taxed differently as the tax only applies to the profit made after the repurchase. (inv...... middle of paper ......value of the company. They also considered that buying shares from shareholders is also considered a better idea if they really need the money. In the midst of street have thought that dividend policy does not affect the value of a company (RA Brealey, SC Myers and F. Allen, "Principles of Corporate Finance", McGraw-Hill International) To conclude, we can say that dividends matter for. all these reasons may not matter in theory, but in practice it is not the same story If there are no taxes, they do not affect the value of the company, but taxes are real because they can make a person invest in a company if. has details about dividend payments. They provide information about how well a company is doing and, for example, if these investors really need money and that they know that such company does not pay out anything, they will not waste time and invest in it..