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Mumbai, Feb 27 () Equity indices reeled for the fifth straight session on Thursday, pressured by a sell-off in bank, IT and energy counters, as the global markets grappled with fears of the coronavirus outbreak turning into a pandemic.<p> The expiry of February series derivatives contracts too kept the domestic markets volatile, traders said.</p><p> After plunging over 465.69 points during the day, the 30-share BSE Sensex finally settled 143.30 points, or 0.36 per cent, lower at 39,745.66.</p><p> Similarly, the broader NSE Nifty fell 45.20 points or 0.39 per cent to end at 11,633.30.</p><p> The Sensex has now lost 1,577.34 points in five days, while the Nifty has shed 492.60 points.</p><p> ONGC was the top loser in the Sensex pack on Thursday, dropping 2.61 per cent, followed by HCL Tech, M&amp;M, SBI, IndusInd Bank and ICIC Bank.</p><p> On the other hand, Sun Pharma, Titan, Axis Bank and Asian Paints climbed up to 3.68 per cent.</p><p> World markets extended their losses while safe-haven assets like gold and US Treasuries strengthened after President Donald Trump announced that the US was stepping up its efforts to combat the Covid-19 outbreak, while the number of cases surpassed 81,000.</p><p> Indian markets were in the negative territory as the rapid global spread of the coronavirus kept investors on the edge and made them seek safety in gold and bonds, said Narendra Solanki, Head Fundamental Research (Investment Services) - AVP Equity Research, Anand Rathi Shares &amp; Stock Brokers.</p><p> India is at risk of getting severely impacted by the epidemic economically because of its high reliance on Chinese imports for various goods, he noted.</p><p> Benchmarks also remained volatile on account of monthly expiry of derivatives contracts, he said, adding that sentiment remained sluggish amid reports that GDP growth is likely to stay flat at 4.5 per cent in October-December 2019.</p><p> The government's GDP estimate for the December quarter is scheduled to be released on Friday.</p><p> Further, relentless selling by foreign portfolio investors (FPIs) spooked retail investors, traders said.</p><p> According to provisional data available with stock exchanges, so far this week, FPIs have offloaded stocks worth a whopping Rs 6,812.57 crore on a net basis.</p><p> Sectorally, BSE realty, oil and gas, metal, teck, IT, industrials, energy, telecom and auto indices ended up to 2.09 per cent lower, while consumer durables and healthcare settled on a positive note.</p><p> Broader BSE midcap and smallcap indices fell up to 0.83 per cent.</p><p> Bourses in Seoul and Tokyo ended with significant losses, while Shanghai and Hong Kong closed with gains.</p><p> Stock exchanges in Europe plunged up to 1.80 per cent in their morning sessions.</p><p> Brent crude oil futures fell 1.33 per cent to USD 52.11 per barrel.</p> On the currency front, the Indian rupee appreciated marginally to 71.62 per US dollar (intra-day).   ANS ABMABM

Markets slump for fifth day on coronavirus woes, F&O expiry

<ul class="summary-list"><li><keyword id="6500564" type="UNKNOWN" weightage="60" keywordseo="Dividends">Dividends</keyword> are periodic payments made to investors who own stock in a company, fund, or partnership.</li><li>The payment of regular, ever-increasing dividends is seen as a sign of a well-run, healthy company.</li><li>Large, mature companies tend to pay the biggest dividends.</li></ul><p>Long before credit cards offered reward points, stocks offered dividends. </p><p>Dividends are a distribution of a company's earnings to shareholders — a little piece of the profits to those who have invested money in the firm. As with reward points, it's a monetary thank you to clients for doing business with them.</p><p>Dividends serve mutually beneficial purposes for both companies and investors, especially <a href="https://www.businessinsider.com/investment-income-assets" target="_blank" rel="noopener">income-seeking investors</a>. An indication of earnings, they reflect positively on a company and the management teams that consistently deliver them. </p><p>Regular, robust <keyword id="56600" type="PERSON" weightage="60" keywordseo="Dividend">dividend</keyword>s earn trust from stockholders. As long as a company's shares maintain their dividend payout, investment dollars continue to pour into shares.</p><h2>What is a dividend?</h2><p>A <a href="https://markets.businessinsider.com/stocks/dividends" target="_blank" rel="noopener">dividend</a> is a payment made to a company's stockholders. Business and financial entities like publicly traded companies, master limited partnerships, and real estate investment trusts issue dividends as a means of distributing their after-tax earnings to investors. Mutual funds and exchange-traded funds pay dividends as well.</p><p>Determined by a company's board of directors, dividends are calculated on a per-share basis. Usually, they're in the form of cash and deposited directly into an investor's financial account.</p><p>However, companies sometimes pay dividends with new shares of stock. And, in some cases, companies offer dividend reinvestment programs (DRIPs) that allow investors to apply the dividend toward the purchase of additional stock, often at a discounted price. </p><p>In the US, companies usually pay dividends each quarter. But payments can also occur monthly or semi-annually. </p><h2>Stocks that pay dividends </h2><p>Most dividend-paying companies are large-cap, well-established, and well-endowed businesses. These mature corporations don't need to reinvest earnings back into the business, the way small- and mid-cap companies or startups often do. </p><p>Industry sectors that are rich in dividend-paying companies — and whose companies pay rich dividends — include:</p><ul><li>Telecommunications</li><li>Energy/Basic materials</li><li>Financial</li><li>Healthcare /pharmaceuticals</li><li>Utilities</li><li>Consumer staples</li></ul><h3>Kinds of dividends</h3><p>Although all dividends come from the same source — the company earnings — the nature of their payouts depends on the class of shares you hold.</p><ul><li><strong>Common dividends</strong> are paid to owners of a company's <keyword id="1242816" type="ORGANIZATION" weightage="60" keywordseo="common-stock">common stock</keyword>. They can fluctuate in their amount each quarter (or whenever they're issued). It's in a company's interest to keep them increasing, or at least constant, but there are no guarantees. </li><li><strong>Preferred dividends</strong> are paid to owners of <keyword id="1114945" type="PERSON" weightage="60" keywordseo="preferred-stock">preferred stock</keyword>. These are the same fixed amount; they don't fall, but they don't rise either. However, should a company run into financial trouble, preferred dividends hold priority over common dividends in the pecking order of payouts.</li></ul><p>Occasionally, companies issue a special dividend — an extra payout to common stockholders. Special dividends usually are issued by firms who have either stockpiled a lot of cash over the years or experienced a windfall — from spinning off a subsidiary, for example. While often much larger than the regular variety, this "extra" dividend is a one-time thing.</p><h2>Important dividend dates to know</h2><p>There are some key dates surrounding dividends — especially pertaining to when a stockholder qualifies for them. </p><ul><li><strong>Announcement date</strong>: The day management declares a dividend, which requires shareholder approval.</li><li><strong>Record date</strong>: The cutoff date, established by the company, that establishes share owner's eligibility for a dividend. This is when you must be on the company's books as a stockholder to receive the dividend.</li><li><strong>Ex-dividend date</strong>: The date, based on stock exchange rules, by which a shareholder must own stocks in order to receive a dividend for the payout period. It's <a href="https://www.investor.gov/introduction-investing/investing-basics/glossary/ex-dividend-dates-when-are-you-entitled-stock-and" target="_blank" rel="noopener">usually set one business day before the record date.</a> Shareholders who own a stock one business day before the ex-date receive a dividend payout. Shareholders who buy the stock on the ex-date or after — don't. </li><li><strong>Payment date</strong>: The date on which a company issues dividend payments, and shareholders receive the money in their brokerage accounts. </li></ul><h2>Are dividends taxed?</h2><p>These dates are important not just because they determine whether you'll get a dividend payment, but also how it could be taxed. </p><p>In terms of taxes, dividends are classified in two ways:</p><ul><li><strong>Qualified dividends </strong>are taxed at rates similar to capital gains: at 0%, 15%, or 20%.</li><li><strong>Non-qualified dividends</strong> are taxed as ordinary income, at your regular tax rate.</li></ul><p>It depends on your tax bracket, of course, but the qualified rate is usually lower. And whether a dividend is qualified depends on how long you've owned the stock — 60 days before the ex-dividend date.</p><h2>How are dividends evaluated?</h2><p>Beyond the basic dollar amount, dividends are evaluated in a few different ways.</p><h3>Dividend yield</h3><p>In terms of valuing a dividend, investors look at a stock's dividend yield — the amount of the annual dividend divided by the stock price on a particular date. Measuring the dividend yield levels the playing field when comparing stocks and their dividend payouts. </p><p>For example, a stock with a $10 share price and a quarterly payout of 10 cents per share yields a 4% dividend. At the same time, a $100 stock that pays $1 per share, also on a quarterly basis, likewise yields a 4% dividend. </p><p>Yield and stock prices relate inversely to each other. As dividends increase, stock prices decrease. So dividend yields go up in one of two ways:</p><ul><li><strong>A rise in the dividend payout</strong>: A company that pays a $4 dividend on a stock valued at $100 has a 4% dividend yield. A 10% increase in the dividend to $4.40 changes the dividend yield to 4.4% if the stock price remains static. </li><li><strong>A decrease in the stock price</strong>: Say, for instance, the price of a stock with a $4 dividend payout falls from $100 to $90. Without a change in the amount of the dividend, the 4% dividend yield climbs to just over 4.4%.</li></ul><h3>Dividend payout ratio</h3><p>Beyond looking at a stock's dividend yield, however, savvy dividend investors look even more closely at the dividend payout ratio to gain a quick assessment of their reliability.</p><p>The payout ratio measures the portion of a company's net income that goes toward shareholder dividend payments. The higher the payout proportion, the lower the margin of safety. As a rule of thumb, investors look for payout ratios that fall below 80% of a company's net income. </p><p>Dividend-paying companies also incentivize investors seeking prudent financial vehicles. While stock investing often triggers capital gains implications, IRS accounting rules around dividend payments create a somewhat kinder, gentler tax hit. Rather than paying a higher capital gain rate, ordinary income rates apply to dividend payouts. </p><h2>The financial takeaway</h2><p>Dividends are lucrative for investors and prestigious for companies. They're a sign that the firm is doing well, so well it can afford to share profits with its investors. In fact, one of the characteristics of a <a href="https://www.businessinsider.com/what-are-blue-chip-stocks" target="_blank" rel="noopener">blue-chip stock</a> — the elite among publicly traded companies — is that it belongs to a company with an established record of growing dividends over decades.</p><p>Companies are not obligated to issue dividends, but once they do, investors expect them to continue, even in tough economic times. They also expect periodic increases. If a company announces a fall in the dividend payout one quarter, its stock price often takes a hit. And an outright suspension of dividends typically suggests a company is in trouble — and it may be time for investors to sell out.</p><h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing</a>:</h2><h3><a href="https://www.businessinsider.com/stock-picks-to-buy-high-dividend-yield-coronavirus-forces-cuts-2020-5" target="_blank" rel="noopener">GOLDMAN SACHS: Buy these 13 stocks primed to keep delivering powerful dividends as their peers are forced to slash payouts</a></h3><h3><a href="https://www.businessinsider.com/what-is-a-corporate-bond" target="_blank" rel="noopener">A corporate bond provides companies with cash and investors with income — here's how to evaluate the risks and rewards</a></h3><h3><a href="https://www.businessinsider.com/what-is-an-etn" target="_blank" rel="noopener">ETNs combine a bond's reliability with a stock's profitability. Here's how they work, and how to weigh the risks and rewards</a></h3><h3><a href="https://www.businessinsider.com/what-is-an-index-fund" target="_blank" rel="noopener">What is an index fund? A low-cost, low-risk way to invest in the stock market</a></h3><h3><a href="https://www.businessinsider.com/how-to-buy-treasury-bonds" target="_blank" rel="noopener">How to buy treasury bonds, one of the safest ways to invest for income</a></h3>

Dividends are payments made by a company to its shareholders — here's how they work

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Markets slump for fifth day on coronavirus woes, F&O expiry

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