A key way that investors make money from stocks is with a dividend. A dividend is income that an investor receives from a company, which is paid out from the earnings of the company.
Not every company offers a dividend to shareholders, which may be because the company can’t afford it or because they would prefer to reward investors by focusing on increasing the stock price.
A typical dividend is around 3% of the stock price, but the dividend can go up to as much as 10%. A high dividend may sound attractive, but it can be a sign that a company is in trouble.
Dividends are usually paid quarterly but can be paid semi-annually or annually. Occasionally companies offer a dividend randomly to reward investors, which is known as a ‘special’ dividend.
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