Dividends

Dividends are portions of a company’s profits that are returned to stockholders. They’re often used to reward investors for owning the company’s stock.

Dividends can provide regular income for many investors. For example, if a stockholder has 100 shares of a company, and the organization provides a $2 dividend per share, the stockholder earns $200. Dividends are usually delivered on a regular basis such as quarterly, semiannually, or annually. A company isn’t required to pay dividends to shareholders unless otherwise stated by the company’s board of directors. To receive dividends, investors must own the stock before the ex-dividend date. Many well-established, stable companies pay dividends. Instead of reinvesting excess earnings back into their business, companies pay stockholders through additional stock or, more commonly, through cash dividends.