Whether you own a business or you want to invest in one, you should learn about the dividend definition and how it affects you. In basic terms, a dividend is a distribution of a company’s earnings. Keep reading to learn more about dividends, how they are distributed and why they’re relevant to you.
If you own stock in a company, you have the opportunity to receive money from a dividend. The more stock or ownership you have, the more you will receive as dividends are generally paid for each share of stock owned.
However, when you receive the earnings and how much you will receive might vary from time to time.
A dividend yield is a financial ratio that measures the portion of cash dividends paid out to shareholders relative to the market value of the share. What this means is that the dividend amount will vary depending on how high or low the market value is.
A dividend is important because basic financial theory states that all companies exist solely for the purpose of paying out dividends and earning money.
A company may refrain from paying dividends as the company continues to grow because they believe the payout will significantly increase or a bigger company will acquire them. On average, most companies that pay dividends will pay dividends four times a year.
The Board of Directors is required to declare and pay out dividends, so when the board makes a declaration, they also decide on a payable date to ensure stockholders of when they will receive their income.
The Board of Directors will decide how the funds will be distributed and can give them out in one of three ways:
Before investing in stocks or bonds, make sure you have enough money set aside in savings. An easy way to do this is to open an FDIC-insured high yield savings account through Synchrony Bank.*
Our banking representatives can provide options to increase your savings and help you plan for your financial future. Now that you’re familiar with the definition of a dividend, call Synchrony Bank at 844-345-5789 and open an account today to start saving.
Economic Times: https://economictimes.indiatimes.com/definition/dividend-yield
The Balance: https://www.thebalance.com/what-is-a-dividend-356103
*FDIC insures our customers up to $250,000, per depositor for each ownership category.
*ANNUAL PERCENTAGE YIELD (APY): All APYs are accurate as of 05/25/2018.
APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. For Money Market and High Yield Savings Accounts, the rate may change after the account is opened. For CDs, a minimum of $2,000 is required to open a CD and must be deposited in a single transaction. A penalty may be imposed for early withdrawals. After maturity, if you choose to roll over your CD, you will earn the base rate of interest in effect at that time. The APY shown for CDs and IRA CDs is for a 60-month CD with a balance of at least $25,000. Click here for all CD rates and terms offered.