What is a Dividend?

What is a Dividend?

Keith Mullin

35 years: Capital markets editorial

Investors buy shares in a company for two principal reasons: generating investment returns as shares rise in price, and receiving dividends. Keith briefly explains what dividends are, what considerations companies have when it comes to issuing dividends and how dividends impact share price.

Investors buy shares in a company for two principal reasons: generating investment returns as shares rise in price, and receiving dividends. Keith briefly explains what dividends are, what considerations companies have when it comes to issuing dividends and how dividends impact share price.

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What is a Dividend?

6 mins 19 secs

Overview

This is essentially when a company rewards its shareholders by paying out cash every year. It is generally paid out of a company’s annual profits or retained earnings.

Key learning objectives:

  • Define Dividend and Scrip Dividend

  • Discuss the potential reasons to not pay out dividends

  • Identify when investors are eligible for dividends, and when they may invest in equity

  • How to calculate Dividend Yield

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Summary
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