Dividends

What are Dividends?

Dividends are distributions of a portion of a company's earnings decided by the board of directors to its shareholders. These payments are usually issued in the form of cash or additional shares, and they serve as a reward for shareholders’ investment in the company. Dividends are often paid on a regular basis and can be a crucial component of a shareholder's return over time.

Short Description: Payments made by a corporation to its shareholders, typically in the form of cash or additional stock.

• Cash Dividends: The most common form of dividend, representing a cash payment to shareholders.
• Stock Dividends: Instead of cash, shareholders receive additional shares of the company, which increases their total number of shares owned.
• Purpose: Dividends provide a way to distribute profits back to shareholders and signal financial health and profitability.

While not all companies pay dividends, those that do indicate a sign of maturity and a stable profit-generating business model. However, younger or high-growth companies might reinvest earnings back into the business rather than distribute them as dividends.