What are dividends
What are dividends
Dividends is payment declared by a company’s board of directors and given to its shareholders that reflects the company’s earnings. Dividends may be paid quarterly (every 3 months) or annually. Not all companies pay dividends. Typically, well-established companies pay, while new growing companies do not. Dividends aren’t guaranteed, so a corporation can stop paying them at any time. Dividends paying stocks could also be attractive surely investors as they need potential double advantage of steady income generation along side capital appreciation thanks to stock price. To keep your money growing as fast as possible, it’s smart to stay reinvesting your dividends instead of spending them once you receive them.
Important points :-
- There is absolutely no legal obligation for any company to pay any dividends to its share holders.
- Dividends are basically the a part of profit or “cash in hand” which a corporation shares with its shareholders.
- All dividend income are tax free for the shareholders while it is taxable for the companies, which is called dividend distribution tax.
- Due to dividends, the cost of shares get reduced by the same amount and hence becomes more attractive to buyers across a period of time.
- Correct way to measure dividend is by the parameter called dividend yield.
Get Important Stock Market Update and regular stock investment ideas From StockFinz. Follow Us: Telegram | Twitter | Facebook | YouTube