Dividends make it possible for people to quit their jobs and live a financially independent life. However, that’s quite a tall order—though it’s not impossible. The only way it will become impossible is if you know completely nothing about dividends.

Companies that are super stable are typically those that pay off solid dividends. With dividends, you can expect to receive a monthly, quarterly, or yearly pay off from a company in which you have invested your money. The amount that you will receive will basically depend on the company’s performance in the market.

In this article, we will tell you what kinds of dividends you can possibly get if you choose to invest in businesses that issue dividends. 

Cash dividends

Nothing’s more reassuring than the feel of cold cash in the palm of our hands. In fact, many people have branded cash as the ultimate safe haven for market participants. 

Regular cash dividends, meanwhile, are those that the company hands out to the owners of the business, which are the shareholders—one of which can be you, if you’re holding some shares. 

A business that issue preferred stocks to investors must give away regular dividends payments to preferred stockholders. Another plus of buying a preferred stock is that you get paid before common stock holders. That’s definitely a perk. 

Sometimes, though, common stockholders also get dividend. The difference is that while preferred stockholders receive set dividends, common stockholders’ dividends are determined at the discretion of the Board of Directors. 

Property Dividends

Properties are also as good as money to some extent. The market doesn’t run out of investors who prefer having some properties under their names, though almost certainly also want to lay hands on some cash. 

Basically, a property dividend is given away by the company when it distributes property rather than cash. Some examples of properties that you may get can be railroad cars, beans, gold, silver, a house, or any other things that have a tangible value. Property dividends are recorded on the declaration date on its market value. 

Special one-time dividends 

Aside from the first two mentioned above, there’s also another kind of dividend that is pretty special for investors and company. 

Sometimes, the company may find it necessary to issue a special one-time dividend. As the name suggests, it differs from the first two kinds of dividends in the way that it’s not regular. Such special one-time dividends occur when, for example, the company sells a business, wins a huge litigation case, or liquidates an investment. 

Special one-time dividends can be issued in the form of cash, properties, or even a stock from the company. In recent years, the number of special one-time dividends have spiked up due to the temporarily lower dividend taxation rates. 

As if that doesn’t make this kind of dividend special yet, there are instances when these dividends are declared as a “return of capital,” which, in a nutshell, means that these dividends are not a payout of the company’s profits. Rather, they are classified as a return of money that the shareholders have invested in the business. When special one-time dividends are declared as return of capital, they become tax-free.