Dividends is the distribution of company’s earnings to its shareholders.
Thank you for reading this post, don't forget to subscribe!Investing in dividend stocks is one of the best ways to build wealth. Dividend stocks usually make payment to your bank account directly for every 3 months.
There are 3 important points for investing in dividend stocks.
1-Dividends are an extra source of income: Many investors depend on dividend payments as a source of income.
2-Dividends impacts Share Price: Dividends are paid from the company’s earnings. On the Ex-dividend date, the price of share fall by the dividend declared price. For example, if a stock xyz trading at Rs.240/-& company declared dividend Rs.20/- Per share, then on the ex-dividend date the price of stock xyz trading at Rs.220/-.
3-Dividend can build Companys Reputations: A company paying dividend consistently is a good sign for investors. The dividend payments keep a relation between shareholders and company, even at financial downturn.
on the other hand, if the company pulled out dividends, then the investors will drop.
Dividend Yield
Dividend yield is a financial ratio which is Dividend/Price. Where dividend means the company’s payout per share in a year & Price is the Market Price of the share/stock.
Dividends are paid at a certain percentage as declared by the board of directors; it is a certain Percentage of the Face Value of the share/stock (not based on market Price).
