Dividend
A dividend is a payment made by a company to shareholders as a reward for owning its shares.
Quick reference:
Form: Usually cash, rarely shares. Frequency: Often twice a year in Australia. Linked to: Company profits.
Key dates: Ex-dividend date, payment date.
Expanded explanation:
When a company makes a profit, it can choose to share part of that profit with shareholders in the form of dividends. In Australia, most companies pay them twice a year. To receive the dividend, you must own the shares before the ex-dividend date.
Dividends are popular with investors who want regular income, especially retirees. They are also linked to something called franking credits, which can reduce your tax.
Not all companies pay dividends. Some, especially younger growth companies prefer to reinvest profits back into the business instead.
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