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.

You’ll typically see dividends associated with those getting closer to  retirement who are not looking for as much growth in their investments  but are more so looking to supplement their income.

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

What is a Dividend?

Many companies that payout dividends are well-established and stable  companies. By paying a dividend, they attract investors creating more  demand for their stock.

Why Companies Pay Dividends

Many companies won’t pay dividends for several reasons, the biggest being it hurts their bottom line.

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?

Dividends can have tax benefits for both the shareholders and the company giving them out.

Dividend Tax Benefit

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