Listen Money Matters - Free Your Inner Financial Badass. All The Stuff You Should Know About Personal Finance.

What exactly are dividends and how do they work? When you invest in a company you get paid a portion of a company’s profits as a way to compensate you for your investment. These payments are called dividends and they are a form of passive income. What are Dividends? When you own stock in a company directly or through a fund you may receive dividends. A dividend is a distribution of a portion of a company’s profits. They are decided by the board of directors and can be issued as cash payments, as shares of stock or other property. It’s an opportunity for a company to reward shareholder loyalty. The amount you receive depends on how much stock you own and how much profit there was to divide. Why Buy Dividend Stocks? Investors, particularly retired investors, like the steady income that dividend stocks provide and also like the option of reinvesting dividends to buy more shares of stock. Not All Companies Offer Dividends Most companies don’t offer dividends, and if they do, they can cancel them if it’s