What is a dividend?๐Ÿ•

A dividend is a passive income you can receive from holding ownership of a financial asset.๐Ÿ 

Dividends may be paid at different intervals such as monthly, annually or quarterly. How much is paid and when is decided by the directors.๐Ÿ‘จโ€๐Ÿ’ผ

Dividends are mostly attributed towards companies but you can also earn dividends from holding other financial assets such as stocks of a REIT.๐Ÿงฆ

Not all companies pay dividends, it is usually paid by companies who are performing very well as a way to entice investors to buy more of their stock or hold more of their stock.

To see what your dividend yield is you should divide your dividend by the price per share multiplied by 100.๐Ÿ“…

Dividends are great because they allow you to exit your investment without having to sell your stock.

Your dividends may be liable for tax so ensure you check with your financial advisor.

Dividends can also be paid out in different ways, these include:

Stable dividend policyโ€”maintains a steady dividend payout

Constant payout ratioโ€”pays out a specific percentage of its earnings each year as dividends

Residual dividend modelโ€”based on the amount of residual earnings left after the company pays all its expenses and obligations.๐Ÿ’ช

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