Stock Market Investors » Glossary of Stock Terms » What is a Dividend?

What is a Dividend?

When you become an owner of a company's stock, the company may pay you the returns in the form of dividend. The latter is usually paid each quarter, but it is up to the board of directors to determine. The board of directors is also responsible for the payment authorization.

Dividends can be paid in variety of forms. Typically, they are paid in cash. Another alternative is the payment of dividends in the form of stocks. Unfortunately, dividends are liable to taxes.

However, you should have in mind that it is up to the company to decide whether to pay dividends or not. An example of a company that will probably not pay you dividends is the one that is experiencing rapid growth. In such a case the company may choose to invest the money back in order to finance its growth.

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