Intro:What are Dividends?

Dividends are a share of profits from a stock.

When a company’s stock rises and that company makes money, they may distribute dividends to shareholders as a payment for investing.

The company does not have to pay dividends when they make a profit; they can reinvest in the company in the hopes of garnering even greater returns.

Some companies may choose to place half of their profits back into the company and distribute the other half amongst shareholders.

What are some characteristics of Dividends?

Dividends are usually a fixed amount per share.

The amount of money that a shareholder receives depends on how many shares of the company they own. If a company is on the rise, it can be beneficial to own multiple shares, as this will result in greater dividends.

Dividends are not always cash; they may also be in the form of stocks or property.

DividndsImage Source: Pixabay

Dividends are often paid semi-annually or annually, but may sometimes be paid as often as quarterly or even monthly.

Not all companies pay dividends, but many do as an incentive for investors.

A dividend yield will tell shareholders and potential investors how much they can expect to gain in dividends over the course of the year.

The dividend yield will change as the value of the stock changes.

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