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Types of SACCO dividends explained

difference saving and investing: Significance of asset base in financial operations: Types of SACCO Dividends: Is buying Sacco shares profitable?

SACCOs (Savings and Credit Cooperative Organizations) offer various types of dividends to their members, each playing a crucial role in the financial well-being of the cooperative. Here’s a breakdown of the different types of SACCO dividends:

  1. Annual Dividends

Annual dividends are the most common type, distributed once a year. They represent a share of the SACCO’s profits from the past year, rewarding members for their support and participation in the cooperative’s financial activities.

  1. Patronage Dividends

Patronage dividends are based on how much members use SACCO services, such as taking out loans or using other financial products. The more a member engages with the SACCO, the higher their patronage dividend. This type of dividend encourages active participation and aligns members’ interests with the SACCO’s success.

  1. Special Dividends

Special dividends are occasionally distributed outside of the regular schedule, often during exceptional circumstances like extraordinary profits or successful investments. These dividends serve as an additional benefit for members during particularly prosperous times for the SACCO.

Difference Between Interest on Savings and SACCO Dividends

While both interest on savings and dividends represent financial gains for SACCO members, they come from different sources within the cooperative.

Interest on Savings

Interest on savings is the return earned on the money a member deposits into their SACCO account. It’s usually a fixed or variable percentage based on the amount saved. Think of it as a “thank you” from the SACCO for trusting them with your savings. This interest accumulates over time, contributing to the growth of your savings.

Dividends

Dividends, on the other hand, are a share of the SACCO’s overall profits. Unlike interest on savings, dividends are not directly tied to an individual’s savings amount but are distributed based on the SACCO’s collective success. The more prosperous the SACCO, the higher the dividends for all members, regardless of their individual savings levels. Dividends reflect the collective achievement of the SACCO community.

 

Andrew Walyaula
Author: Andrew Walyaula

Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com

Andrew Walyaula

About Author

Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com

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