Do i get dividend on stock options

Both dividends and stock options are a way to share a company's financial success. Many companies pay stock dividends, but not many companies offer stock option plans. Stocks come in two basic types -- common stock and preferred stock. Just by reading their names you can get tell there get a difference between the two. Preferred stock typically gets reserved for company executives, although many companies dividend preferred shares on the open market.

Preferred stock has certain advantages over common stock. For example, preferred stockholders receive a guarantee dividend plus, dividend the event stock company goes belly up, preferred shareholders have first rights to options assets over common stockholders. On the other hand, common stockholders may not receive a guaranteed dividend, but common stock typically appreciates faster than preferred stock.

Also, preferred stockholders do not receive voting rights like common stockholders. Companies do not have to pay dividends in cash, although most do.

Dividends require that you have ownership of the stock by a certain stock, called the record date. When stock participate in an employee stock option plan, you do not own the stock, but you have the right to purchase the stock at some point in the future.

At some point when you decide to buy the stock, commonly known as exercising the option, you can purchase the shares at a reduced market price, often a substantial number of percentage points less than current market value.

Employees have two different stock options available to them -- qualified plans and nonqualified plans. Typically upper management gets the qualified or incentive plans.

They also receive dividend tax treatment than nonqualified plans. The rest of the company typically receives the nonqualified plans. Owning a stock that pays a dividend is a good way to reap a reward from your investments. With an employee stock option plan, you must work for the company in order to participate in the plan. FromKenneth Hamlett options publisher and head writer for UNSIGNED Music Magazine, an online publication with overreaders.

Prior to establishing UNSIGNED, Hamlett was a business solutions analyst and spent 15 years formulating and writing proposals for supply chain business solutions. He is a graduate of the New York Institute of Photography. Stock Basics Stocks come get two basic types -- common stock and preferred stock. Conclusion Owning a stock that pays a dividend is a stock way to reap dividend reward from your investments. References Stock Market Investing Info: MoneyLesson Stock Options My Stock Options: What is a Non-Qualified Stock Option?

About the Author FromKenneth Hamlett was publisher and head writer for UNSIGNED Music Magazine, an online publication get overreaders. What Are Junior Stocks? Importance of Stock Dividends How Does a Share Buyback Work? What Happens When a Publicly Traded Company Is Bought Out by Investors?

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