What are dividends?

Dividends are company earnings paid to shareholders on a pre-determined basis throughout the year, such as quarterly, semi-annually, etc.

Dividends are particular to C-corps only, because they are public companies trading in the stock market.

Dividends are determined by the company’s board members, and has a direct effect on the company’s income. For example, if a company is trading at $29 a share and the company pays a $4/share dividend, then the the company’s stock would open at $25 on the ex-dividend date.

Dividends are usually paid with a check that is mailed to stockholders a few days after the ex-dividend date. The ex-dividend date is the date in which the stocks start trading without the previous dividend. Some stock holders will choose to re-invest their dividends by investing in additional shares of the stock.