What Is a Dividend?

Shareholders earn dividends. Dividends are the profits that shareholders receive from the company in which they hold shares, the amount of which is based on the number and class of shares they own.

Dividends are usually paid in cash, but may also be paid in shares or shares.

Where have you heard of dividends?

Dividends paid by a company are usually seen as a reflection of the company's profitability and soundness. Therefore, news reports about the company's performance may refer to dividend payments and increases or decreases in dividends.

What you need to know about dividends...

The time and amount of dividend payment shall be authorized by the directors of the company.

Listed companies usually pay dividends once a quarter. Small companies may pay dividends at the end of the fiscal year. The company is not required to pay dividends each time. Emerging developing companies can choose not to pay dividends and continue to invest their profits in the development of the company.

Seeking income investors will look for companies that pay high dividends on a regular basis.

Dividends may be paid out of current earnings, past earnings or set aside as reserves. Holders of preferred shares usually receive a fixed dividend and a preferred payout. Investors are usually taxed on dividend income.