How To Do Dividend and Bonus Shares Calculation In Stock Market?

We purchase the shares from the primary and secondary markets at different prices as per the market price of that particular stocks. These companies give us dividends and bonus shares annually from their profits and earnings. We easily get the dividend and bonus shares directly to our account but being an investor we should also know how dividend and bonus share works by ourselves. So here we are going to discuss briefly dividend and bonus shares and we will learn how they are given to us:

 What is a Dividend?

The dividend is simply a cash amount(can also be issued in share forms) that is distributed from a company to its shareholders from their earnings. Most of the companies distributed dividends annually on their AGM day in Nepal. And company distributes dividends in percentile form to their shareholders like 20%, 40%, 50%, etc. The board of directors of that company decides the percentage dividend distribution to its shareholders. Dividend distribution of any company directly related to the increase or decrease of the market price in average from the previous year and profit and loss of the company. So we can say that dividend distribution capacity is directly proportional to the profit of that company in an entire year.

How To Calculate Dividend?

For eg; any company named ABC announces a cash dividend of 20% to its shareholders and you have 100 kittas shares of that ABC company. Now from this, you can easily calculate how much cash amount you are going to receive after payment is done. The dividend announcement 20% is you are going to get Rs.20 per share that you invested in that company. So per share, you will get Rs.20 but you have stock of 100 shares to that company, so, you will get Rs.20*100=Rs.2000 as a cash dividend directly to your account. (Paid-up value of most of the stocks per share in Nepal is Rs.100.So dividend is also calculated assuming this. If the paid value is Rs.200 per share then Rs.20*200=Rs.4000 will be total dividend amount.)

Dividend announces from company=20%

Paid-up value of company per share=Rs.100

Number of shares you have of that company=100

The total dividend you will get=Rs.20%*100*100

                                                 =Rs.2000 

What are Bonus Shares?

Bonus shares are like normal shares distributed to shareholders of a company from the profit and earnings to increase the capital as the main purpose. Bonus shares are distributed free cost of charge unlikely to the right shares. Like dividends, bonus shares are also distributed annually in AGM day. Board of directors announces a certain percentage of bonus shares but for the final issues of it, approval should be come from SEBON.SEBON will decide whether the company is capable of issuing the bonus shares or not ie; capable of increment on capital or not. Most of the companies in Nepal distribute bonus shares in share form unlikely to some of the companies who distribute in cash form also. After getting the bonus shares, these bonus shares will also be listed to your Demat account summing on your previous shares.

How To Calculate Bonus Shares:

For eg; a company named XYZ announces 20% bonus shares to its shareholders and you have 100 kittas shares of that company. From this data, you can easily calculate how many shares are going to be added to your previous shares in your Demat account. Bonus shares of 20% indicate that you will get 0.2 kitta per share. But you have 100 kittas shares. So for your 100 kittas shares, you are going to ger 0.2*100=20 kittas shares making up a total of 120 kittas shares after it gets listed. Only after the listing of Bonus shares to NEPSE, you can do the transaction of bonus shares. Same goes with the bonus amount also.20% bonus share means Rs.20 per kitta of your share. So you will get Rs.20*100=Rs.2000 as a bonus amount.

Bonus share announcement=20%  

Number of shares you have of that company=100 kittas

Total bonus shares you will get=100*20%

                                                  =20 kittas

The total amount of bonus amount=Rs.100*20%*100

                                                 =Rs.2000