Thank you very much to Oprah for the introduction. Yes, you are right, we are here to talk about dividends.
Let’s recap shares real quick
When people invest in shares, they buy an ownership stake in a company.
If that company is profitable, they might choose to pay out some of those profits to shareholders.
This profit distribution is known as a dividend.
As an investor, it’s basically cash in your pocket. Or, even more if you choose it to be.
How are dividends paid?
Dividends are paid on a per-share basis – if you have 1 share you get 1 dividend, 10 shares gets 10 dividends etc.
They are a sweet perk for investing – they can be kept as cash or reinvested into the same or different companies.
Dividends are distributed to shareholders via their brokerage platform, pretty easy. It’s all looked after for you.
Do all companies pay dividends?
Not all companies pay dividends equal. Many growth companies might not yet be profitable or might choose to reinvest their profits back into the company.
This process is known as retaining earnings.
Typically, larger, more stable companies pay dividends. In Australia, these are often banks or mining companies.