what is a dividend?

a simple explanation + 4 tips 

Whether you are just starting to invest or have been investing for decades, dividends can be a valuable part of anyone’s investing portfolio.

Generally speaking, a dividend is a distribution of a portion of a company’s earnings paid to the shareholders.

What is a Dividend?

Companies That Pay Dividends

Many of the companies that pay out dividends are long-standing, well-established companies. As a result, they will pay out dividends to continually attract investors.

The simple answer is to attract more investors. By paying a dividend, they attract investors creating more demand for their stock.

Why Companies Pay Dividends

Usually, companies just starting up, are more mindful of their cash flow. Others will argue that dividend payments don’t attract retired investors.

Why Companies Don’t Pay Dividends

The company will automatically pay to your brokerage account at distribution time by buying a stock or mutual fund that pays out dividends.

How Do You Earn A Dividend?