What Are Dividends? A Guide to Dividend Investing

Dividends are portions of a company profit distributed to shareholders.

How Do Dividends Work?
Companies typically distribute a portion of their annual profits as dividends. If a company pays $2 per share and you own 100 shares, you receive $200 in gross dividend income.

What Is Dividend Yield?
Formula: (Dividend per share / Share price) x 100. A stock priced at $100 paying $5 has a 5% yield.

Key Dividend Dates:
- Earnings announcement
- Declaration date
- Ex-dividend date
- Payment date

Dividend Investing Strategy:
Aims to generate passive income by investing in companies with consistent and growing dividend payments. Blue-chip stocks in banking, energy and telecommunications typically offer higher dividends.

Note: Dividends are subject to withholding tax.