Day36. Financial term | Share dividend

Tiger_Academy
2023-08-23

Share dividends or dividend payouts refer to the distribution of part of a company's profits to shareholders after the company makes a profit. This is a link between a company's profits and shareholders' equity.

In share investing, share dividends are an important way to generate returns.

First, share dividends help boost share prices. Dividends have a significant impact on a company's financial condition and operating performance. For a company, dividends can only be paid when there is sufficient cash flow and profits.

When a company announces that it will pay dividends, it means the company is performing well and share prices will rise accordingly.Second, share dividends can provide stable investment returns.

Compared to fluctuations in share prices, dividends are more stable and reliable. Especially for investors pursuing stable investments, share dividends are very attractive.

In addition, share dividends can also serve as a source of income for investors. For shareholders holding a large number of shares, dividends can be a source of steady cash flow.

At the same time, for investors relying on share investments for income, dividends can help them balance the relationship between income and expenses and improve their financial stability.

Here is an example to help you better understand the concept:Suppose an investor holds 1,000 shares of a listed company's share. The company announces a dividend of $1 per share in cash. Then the investor will receive $1,000 in dividend income.

In addition, some listed companies also choose to pay dividends in shares, which means shareholders can receive additional shares as dividends to increase their shareholdings.

However, share dividends also pose some potential risks.

First, dividends may affect a company's future investment plans and development strategies.

When paying dividends, a company needs to consider its future development and investment needs. Excessive dividends may affect the company's future development.

In addition, share dividends may also have a negative impact on a company's share price. Because share dividends reduce a company's cash flow, causing a shortage of funds and affecting its development and investment plans.

This may have a negative impact on the company's share price.Therefore, when investing in shares, investors need to pay attention to a company's dividend policy and financial condition.

Whether a dividend policy is good or not is an important indicator of whether a company is worth investing in.

At the same time, investors also need to pay attention to the balance between dividends and a company's long-term development strategy, as well as the impact of dividends on a company's financial condition and share price.

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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • highhand
    2023-08-23
    highhand
    take the cash dividend sand re invest in whatever you choose
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