Insights on Dividend Matter

The primary focus on the equity investors, their shareholdings and the requirement to pay out the percentage of the profits of the company, was high and the investors too were looking forward to the dividend form their investments made like the golden eggs form the hen, form each of the corporations where they had invested.

With too many regulations to be adhered to, reports to be submitted to the boards, the safer measures for the shareholders in the knowing the financial health of the company was to await the percentage of dividend declared, which was very important for them to understand the capital appreciation and the stable return to expect in the volatile situations. The measure is always on how much total dividend is paid in terms of the total equity returns in the markets.

Investors’ views

  • while many investors do not associate the equity income with the capital appreciation, dividend has played an important element in building the wealth of the companies, in times of negative returns which acts like a cushion in times of falling markets
  • the opportunity to accelerate growth is more if the dividend is reinvested for the investors to capitalize and accumulate additional shares during falling, market conditions at lower equity prices without a need to invest in any additional capital
  • The quantitative and qualitative view to evaluate the stock with metrics dividend payment is an effective tool to analyze how good the company is qualitatively run.
  • the management decision to distribute a portion of their earnings from the company to the investors and shareholders gives the meaningful perspective of the financial health of the company and confidence of management to face the future with a lot of discipline and efficient approach which buys in the trust of the investors
  • no amount of creative accounting estimation or any manipulation is possibly done as the investors are paid dividend based on the accounting choices of the company and the regulations been followed

Investing involves risk which is inherent, and they cannot expect the same percentage of dividend to be distributed YOY, as past performance cannot be guaranteed in the future, hence investors should carefully read the objectives, the risk involved, charges and expenses associated with the prospectus before heavily investing in the shares of a company in public. Market conditions are strong stimulators in determining the straightforward and effective tool of the investors in analyzing the quality and net worth of the company which is expected from a company.

 

Why is risk management important?

Risk management is essential for every organization. Irrespective of the size of the business, the industry to which it belongs, a risk management plan should be established in place as early as possible. Every business that has ever outshined its competitors and made a difference has had a risk-taking attitude.

Risk management starts with risk assessment where the organization has teams that work on recognizing the possible risks. After the potential threats are found, the teams then narrow down the ones that really matter. Risks could be both internal and external.

Financial decisions can be made with better accuracy

There are various types of threats or risks to look out for including credit risk, market risk and more. When the organization knows exactly what to look out for, aversion becomes simpler. And this would help the businesses stay financially prepared. And in the end, if you are looking for a reliable investor then remember that investors make it a point to analyze the company’s risk management strategies.

Improves the customer and employee satisfaction

Organizations that believe in taking preventive measures than corrective ones are the ones that are viewed with respect. Customers trust organizations with sound risk management plans. And employees would love to work for such organizations. Having satisfied the employees, as well as customers businesses, would be able to create an impact in the long run.

Identify the types of risks that matter the most

Operational risk, reputational risk, credit risk and market risks are the most common types of risks that every organization should be aware of. These help the organization to get the bigger picture of the credit performance to expect and the market position that the business holds. Risk management can sometimes get more complicated. For bigger organizations, the situation is even tougher. To improve the efficiency there are enterprise management tools available. There are small businesses that outsource risk management to vendors who are equipped with all such sophisticated tools for better risk assessment and management.

There is a rise in demand for risk managers

Every single risk that an organization crosses would have an impact on the financial performance of the organization. So risk management jobs are on the rise. Risk managers now play a crucial role in the growth and progress of an organization. They help in assessing the risks and thus helping businesses take critical decisions that help improve the strategies for success.

Top 3 Financial Benefits Of CSR

Whatever might be the individual goals of the corporations present today, everyone’s ultimate aim is to succeed financially, in where lays not only the growth but also the survivability of the organization. Therefore, every corporation follows unique ways to ensure that they are performing well financially to survive the competition and make it to the forthcoming years, prominently. Of all such ways incorporated, the simple, yet, effective way that can be used to improve the financial benefits of the corporate is by improving the CSR factor.

Yes, when a corporation is socially responsible, it increases its chance of gaining more financial benefits, in the following 3 ways.

Increased business reputation

The reputation of a corporation not only depends on the quality of the products they produce but also on the quality ways incorporated by them to produce the products, of which the social responsibility factor tops the list. Let’s consider the case of ‘The Body Shop’ for that. The success of their products is just not because they are made with quality or variety but also because they are made responsibly, without including any animal testing, which shows CSR is important for boosting the business’ reputation, which in turn boosts the financial benefits aka profits enjoyed by the corporation.

Operational cost savings

When a corporate believes in acting socially responsible and incorporate methods supporting the same, it can gain financial benefit in the name of ‘operational cost savings’. The classic example is the case of PepsiCo. We all are aware, how PepsiCo was constantly criticized for wasting the water resources and how the company decided to put an end to it by following water efficiency policies, this act of social responsibility has resulted not only in increased reputation of the PepsiCo, but also resulted in company saving nearly $80 Million in operational cost, which is nothing but a valuable financial benefit for the corporation!

Improves sales figures

Customers these days are becoming smarter, thanks to the increasing social awareness that encourages them to be responsible for what they do and whom they choose. That is why while choosing an organization’s product or service, a customer’s thought is not only limited to the product’s or service’s price, quality, and, appearance but also is concerned about their ethical value, such as preferring quilt bags over leather bags made of animal skin, preferring cosmetics that are not tested on the animals and so on that shows a responsible act by a company that concerns society and environment can help them earn more money in the name of profits.

Raising Funds- Gateway to Reap Profits

Money multiplies money” is a belief we may have come across. As a start-up business the seed money which is the initial capital money if self-invested from one’s own pocket gives liberty to function but does not give wings to reach the heights, there comes the necessity to raise funds for the business. Fundraising can be painstaking for a small business where they have no historicity. Injecting money into an already ongoing business need not be a matter of concern but to generate revenue at a state of evolution may depend on various factors. Why should I Invest in this? Needs to be answered, hence there are few guidelines on proposing financial institutions and fundraisers for capital investment in your business.

Nature of Business:

One of the major reasons for investment depends on the Realistic and Practicality of the business. Entrepreneurs often tend to be too optimistic about the future and potential success, end up being unrealistic. Financial institutions clearly scan the sustainability of the business and then process further.

More the capital, better the chance of survival:

The debt-equity ratio of any business should not exceed 2:1, which made vary from industry to industry. It takes a good level of waiting to achieve the breakeven first and then to reap profits. The business should also get breathing space between capital utilized and the final output. Hence the financial planning comes as the crux of the business. Also to manage the interest loans and other capital investment payback has to be taken care of.

Initial Public Offer” a route plan for generating capital proves to be proven business strategy. Once the business is operational with initial seed capital either owed or from an investor providing returns and a sustainable growth in the forecast, to raise further capital to achieve the forecasted growth and generate value for the promoter for taking the start-up risk and risk of initial capital contribution, IPO can be one of the best options.

It becomes the responsibility of the promoter and the management of the company to generate value for the shareholders of the company. Dividend payout is considered as one of the topmost value generating proposition for any company. A regular and timely dividend to the shareholders is perceived as one of the key factors to lure new investors in the company and generate further value.

Mutual Funds Basics

We struggle in lives and work only to lead a better life tomorrow. So, our today’s are all made for our tomorrow’s and we take necessary steps in determining them. We work, save a little, spend as much as our commitments and finally crib about not being able to meet the expectations set at the beginning.

So, how do we change the life course? How can we become better financially and stay independent? Well, investments are the path that we take to create a better tomorrow. The investments are made so that they help us lead a better life when we are no longer in a position to earn.

Life and investments:

There are many investment instruments that one can rely upon. They range from stock investments, bank deposits, insurance policies that cover life and also retirement, fixed deposits in different organizations, investing on companies via mutual funds, or any other mode, bonds and debts to others, and lastly just letting the money park in your savings account.

Now, when you are looking to seek growth to your money, each of them falls in a different order. Not all of them render the same returns as we expect, there are many factors determining the returns. Investing in markets is anytime the best vehicle to park your money for a longer growth period, where you will get returns, given that you have chosen the right path after a good research.

So, which vehicle is good and safe to park your money? Sometimes we get money in a lump sum, other times what is remaining with us is the small portion, so we need a solution to distribute them equally or even use the same path to achieve the end result! Exactly that is what a Mutual Fund investment does!!

Read more about Mutual funds:

Mutual funds are professionally managed investment tools that invest your money in other companies’ stocks, bonds, short-term funds, in the form of shares. Unlike investing in stocks, investment in mutual funds has many more people like you, so it’s a pool of investors that share the units available to the number of people in the pool.

Types of funds:

There different types of funds based on the maturity period of the scheme, based on the objective of the investment like to grow the corpus or looking for easy liquid funds and so on. Apart from this, there are also special funds that only concentrate on saving your taxes.