What Is a Dividend?

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A dividend is a stated amount of a company's earnings that the board of directors elects, usually once a quarter, to pay out to shareholders. Find out how dividends are expressed with help from a portfolio manager in this free video on personal finance and money management.

Part of the Video Series: Stocks & Bonds
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Video Transcript

Okay, so what is a dividend? A dividend is a stated amount of a company's earnings that the board of director elects, usually once a quarter, to pay out to shareholders, and it a dividend is usually expressed in dollars or cents of a share, or a percentage yield. And the dividend; for example, if you owned a stock that was fifty dollars a share and you had a dividend of ten percent, that'd be a huge dividend, but just for sakes of the time it's ten percent, and that would mean that every year you would make five dollars on that stock. Dividends usually, on average, over time, are usually between one and and maybe three percent; something you can look at seeing on a dividend. But, dividends really are just payment for ownership, and that's what you have when you buy a stock; your you own a fractional part of a company, and the board of directors, if they're profitable, are paying you for your ownership.

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