What Are Dividends? (#31)

 

What Are Dividends?

A Company shares a little amount of their profit with their share holders known as Dividends.

Do All Companies Pays Dividends?

No! It is not important for a Company to pay Dividends.

& Infact, if a Company is NOW paying Dividends then nobody can say for sure whether if that company will keep on paying Dividends forever.

Henceforth, it is not compulsory for a company to pay dividends to their investors.

What Kind Of Companies Pays Dividends?

Generally, Large Companies pays Dividends. The Small Companies/Businesses rarely pays any Dividends, as they usually focus on Business Expansion & try to reinvest in their own Business from the profit they've made. & that is totally understandable!

By the way, Now it's not like the Large Companies don't grow/try to expand.... I mean they do, but you know, like— they are already LARGE. They've grown almost! You know.... If that makes sense to you!

Who Pays Dividends?

Paying Dividends OR Not Paying Dividends completely depends on the Company's Board Of Directors.

How Often Do A Company Pays Dividends?

Companies pays Dividends after a particular Time Period.... & infact, many Companies have the time set & even publicly available on the internet, revealing the dates on which they are gonna pay the Dividends.

Also, for your information.... I would like to let y'all know that.... Some Companies tend to give more/free/extra shares to their share holders. Which is basically/kind of the same thing as paying Dividends!

& By the way.... Extra Shares of these kind have nothing to do with Stock Split. If you know what that means!

I mean.... that's what I beleive.... like— it shouldn't be related to because of Stock Split!

CONTROVERSIAL.... BUT THATS WHAT I THINK!

& Now to explain y'all that, What Dividends Are In Simple Words?! (Example!)

So,

Dividends are basically kind of like keeping your money in the Bank.

Like— you know like.... whenever you keep your money in Savings Account for a specific period of time.... like maybe a year or so.... then you'll get Interest or some additional money by the Bank or whatever. (Not taking "FD" as an example, here!)

So,

Similarly, DIVIDENDS is your reward Or so called — interest paid to you by the Company for buying & therefore HOLDING their Share/s.

-- It's just that Simple! --

So, I hope at this point, you've understood What Dividends Basically Are!

So, Make sure to Leave A Comment & let me know if there's something you've gotta say....!

Thanks For Reading!