Dividends are payments that companies distribute to their shareholders, usually from earnings. Heres what every beginner should know:
- Definition A dividend is company profit share given to investors.
- Frequency Companies may pay dividends semi-annually.
- Types Dividends can be stock dividends.
- Dividend Yield Shows how to buy General Electric Company much return you get from dividends compared to stock price. Example: if Microsoft pays $2 yearly and stock price is $100, yield = 2%.
- Advantages Provides passive cash flow.
- Risks Companies can cut dividends during financial trouble.
Many investors build income strategies by focusing on strong companies with a history of regular payments.
