Dividend stocks are one of the simplest ways for investors to create passive income. As public companies generate profits, a portion of those earnings are siphoned off and funneled back to investors in the form of dividends. Investors can decide to pocket the cash or reinvest the money in additional shares.
A dividend is a distribution of income via a company to its shareholders.[1] when a business enterprise earns a profit or surplus, it is able to pay a part of the earnings as a dividend to shareholders. Any amount now not dispensed is taken to be re-invested inside the commercial enterprise (referred to as retained earnings). The modern yr earnings as well as the retained income of previous years are available for distribution; a enterprise is usually prohibited from paying a dividend out of its capital. Distribution to shareholders can be in coins (usually a deposit right into a financial institution account) or, if the company has a dividend reinvestment plan, the amount may be paid by using the issue of further stocks or by means of share repurchase.
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