Contacts
Dividend
11 august 2021
Part of the net profit of a company that we receive as co-owners in it.
The profit can be used to open a new production line, for example. Or to expand the branch network of stores in the country. This would lead to an increase in our share price, giving the expectations of higher profits in the future. If part of this profit remains unused (we do not reinvest it in our business, for example, we decide not to open a large number of new stores), we have to pay corporate tax on it. Once we pay corporate tax, what we have left is called net profit. We distribute this net profit according to the shares held by each of the shareholders.
Example:
Our company ABC sells tools that it buys from an importer of the brand X. The company has three shareholders, and we are one of them. We own 20% of the company's shares.
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2020 sales revenue: BGN 13,000
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Cost of purchasing the tools from the importer of brand X: BGN 6,500
Seller's salary cost: BGN 2,000
Opening a new store in Plovdiv: BGN 3,000
Interest on bank loan: BGN 400
Profit. BGN 1,100
Corporate tax 10%. BGN 110
Net profit: BGN 990
We decide to distribute these BGN 990 to the shareholders as dividends. We own 20% of the shares - this means that we will receive 20% x BGN 990 = BGN 198, which we receive in our bank account. Our dividend is BGN 198.
