Generally speaking, a dividend is a distribution of a portion of a company’s earnings paid to the shareholders. It can provide income and growth for long-term investments.
The simple answer is to attract more investors. By paying a dividend, they attract investors creating more demand for their stock.
The biggest reason is it hurts their bottom line. Usually, companies just starting up, are more mindful of their cash flow.
The company will automatically pay to your brokerage account at distribution time by buying a stock or mutual fund that pays out dividends.
For the company, by giving part of their profits to shareholders, they won’t be taxed on that money. For shareholders, there can also be a tax break.