How Are Dividends Declared?
Dividends — both the payment of by companies and the pursuit of stocks that pay them — have been out of favor for quite some time now. Yet, adding companies with a strong history of increasing their regular dividend payments to your portfolio can help give that extra dose of adrenaline to your investment returns. Let’s first look at where dividends come from. Then we’ll discuss the process of when and how they’re paid. Where Do Dividends Come From? To be able to pay its shareholders dividends, a company needs to make profits. Of course, certain companies have paid out dividends even when they made a loss just to keep the tradition going. As savvy investors, it’s best to avoid these kinds of companies. When a company turns a profit, it has several options with what to do with the money …. plow the money back into the business, expand by using the money to buy other businesses, pay down their debt, etc. These steps all help grow the company. A company can also pay out some of t
