Dividends are a cut of the profits that companies pay out to stockholders and are paid quarterly
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Question:
As an example, if a company pays a quarterly dividend of $.20 a share and an investor owns 100 shares, then they would receive $80 per year as their cut of the profits. An investor can receive a quarterly check of $20 in the mail but most just have the dividends paid into the cash portion of their brokerage account or in reinvest it back into the company by purchasing more stock through a dividend reinvestment program.
Dividend reinvestment programs generally allow for the purchasing of up to 1/1,000th of a share so every penny can be used.
Why are some companies may be reluctant to cut their dividends, even in times of decreasing profits?
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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