In the world of investing, dividends are an essential part of a sound investment strategy. In 2022 dividends will become even more critical to investors as more companies begin paying dividends once again.
Dividends Explained for Beginners
Dividends a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits (or reserves).
Dividends are paid out by a company’s net earnings at the end of each accounting period (monthly, quarterly, or yearly). The purpose of dividends is to share the company’s revenues with its investors, and a business’s board of directors must declare dividends.
Dividends give an investor dividends which they can reinvest into another stock (or multiple stocks). The reinvested dividends increase the number of shares owned and provide additional dividends when they become available.
Some people would prefer dividends over capital appreciation, where dividends vary from month to month, and it is impossible to predict when dividends will come in. A good investment strategy for dividends is investing in companies that have a long history of paying dividends, although this might require further research on the investor’s part.