Welcome to a short and fruitful video in which I tell you what a dividend is!
Remember that awesome video in which I describe what a stock is? If not, hurry and watch it from the link below this article – first of all, it’s the basis for today’s video, and secondly, you’ll spend an extra minute with me! And that’s priceless, isn’t it?
Now, back to business – What is a dividend?
- A dividend is a payment made by a corporation to its shareholders, typically as a distribution of profits. When a company earns a profit, it can choose to reinvest that profit back into the business for growth or expansion, or it can distribute a portion of those earnings to its shareholders as dividends.
- Dividends are usually paid out regularly, often quarterly, but they can also be issued as one-time special dividends. The amount of the dividend each shareholder receives is typically based on the number of shares they own in the company.
- Dividends can be issued in the form of cash payments, additional shares of stock (so-called stock dividends), or other property.
It’s important to note that not all companies pay dividends. Some newer or rapidly growing companies may choose to reinvest all of their profits back into the business rather than distributing them to shareholders. Whether a company pays dividends or not depends on various factors, including its financial health, growth opportunities, and the preferences of its management and board of directors.
