What is dividend

A dividend is a distribution of corporate profits to a company’s shareholders. It is a way for companies to share their financial success with their investors. Companies that pay dividends are typically considered to be more mature and financially stable than companies that do not pay dividends.

Here are some of the key facts about dividends:

• typically paid out quarterly or annually.
• paid in cash, but they can also be paid in the form of stock or other assets.
• a percentage of the company’s share price.
• considered to be a form of income for shareholders.

There are a number of reasons why companies pay dividends. Some of the most common reasons include:

• To reward shareholders for their investment in the company.
• To attract and retain new investors.
• To manage the company’s cash flow.
• To comply with investor expectations.

The decision of whether or not to pay a dividend is ultimately up to the company’s board of directors. They will consider a number of factors, including the company’s financial performance, its future growth prospects, and the preferences of its shareholders.

Here are some of the pros and cons of receiving dividends:

Pros:

• provide a steady stream of income.
• can help to reduce the risk of stock price volatility.
• can be reinvested to earn additional income.

Cons:

• are not guaranteed.
• Companies that pay dividends may have less money available for growth.
• may not be taxed favorably.