Similarities of Small Stock & Large Stock Dividends

by Jennifer Leighton

Each company, whether small or large, has its own policy regarding dividend payment. Both small and large companies may pay dividends, although the size of the dividends can vary quite widely. Small companies are often still growing and may have shareholders who prefer small dividend payments so that more money can be reinvested into the company. Shareholders of large, well-established companies often prefer higher dividends to reinvestment of their dividends into company expansion. All dividends -- regardless of the company's size -- have much in common.

The Schedule of Dividend Payouts

Both large and small companies will pay dividends to their shareholders on a specified date. Each company will pay dividends according to its own specific payout dates, which are disclosed in a dividend pay table that is available to all shareholders.

Eligibility for Dividend Payouts

In order for a shareholder to be eligible to receive dividends, the shareholder must own company shares on the "Ex Dividend" date. This date will typically be 30 days prior to the payout date.

Order of Asset Distribution

Large and small companies have similar protocols regarding the claiming of assets. According to corporate financial rules for both large and small companies, payments to company creditors must be made prior to the distribution of shareholder dividends. In situations such as an active bankruptcy, the payouts must be made in a specific way, whether a large company or a small company. Assets must be liquidated so that bondholders may be paid prior to any distribution of dividends to shareholders.

Taxation of Dividends

As of 2012, the Internal Revenue Service divides dividend income into two types: Qualified dividends and ordinary dividends. The qualified dividends fall into the 15 percent tax bracket, or may be in a zero tax bracket depending upon the financial situation of the person claiming the dividends. The ordinary dividends are considered part of regular income for the purposes of taxation.