Ben asked in Business & FinanceInvesting · 9 years ago

how do dividends work?

So if I understand correctly, stocks represent a piece of the companies assets and profits or equity.

So when a company pays a dividend to a stockholder, does the stock holder lose the stock? because if they still have it, doesn't that mean you could make nearly infinite amounts of money just by making sure ur dividends are more than the money you invested?

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  • 9 years ago
    Favorite Answer

    When you buy a share of a company like Coca-Cola, you get a very tiny payment for each share on a regular basis. That tiny amount could be a dollar or 40 cents or something like that. Some people live off of dividends. They own millions of shares of a company, and when they pay out dividends, the money adds up so they can live on those payments.

    The dividend comes from the company. The company is making a profit and can afford to pay each investor a small amount. As I said, large investors, who own many shares, get more money. Small investors, who own just a few shares, get only a few dollars.

    If you go on this page, look for "Annual Dividend" -- that tells you how much money you get for owning one share of this company:

    http://www.marketwatch.com/investing/stock/KO/prof...

    When there is a recession, the companies that pay a dividend may lose money. They may actually go into red. If they stay that way, they may decide to cut the dividend payments. So, do not assume that these companies are going to pay out money to you regardless of what happens. Always keep an eye on their earnings statements.

    Not every company will pay a dividend. And some companies pay more, some pay less, so you have to check before you invest. Also, some good companies regularly up their dividend payments. Here is a list of companies that pay a nice big dividend: AT&T, Verizon, Altria, Royal Dutch Shell, Duke Energy, Eli Lilly

  • Anonymous
    9 years ago

    When a company is making a profit they have two choices on what to do with the money. Choice #1 is to reinvest it back into the company for future growth and Choice #2 is to pay out the profits to it's share holders in the form of a dividend check. The more profitable a company is the higher the dividend payment is.

    Some companies have paid out over 10% so far this year

  • schmit
    Lv 4
    3 years ago

    Dividend date is the precise date that's situation to pay. Ex-dividend is recounted to a inventory if a man or woman has been validated to get fee via the enterprise and if someone acquire inventory after Ex-dividend dates, then prior proprietor gets dividend most effective via enterprise. If you wish to get dividend for certain inventory, you then must acquire inventory earlier than ex-dividend date.

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