A dividend is a share of a company's profits paid out to its shareholders, usually as a cash payment for each share you own, on a set schedule such as every quarter. The more shares you hold, the larger your payment. Whether a company pays dividends, and how much, is always its own decision.
What is a dividend?
A dividend is a portion of a company's profits that it chooses to return to the people who own its shares. As a shareholder, you're a part-owner of the business, so a dividend is your share of what it has earned. If you're new to the basics, start with [What a stock is].
Companies that make steady profits and don't need to reinvest everything often pay dividends. Others prefer to put all their earnings back into growing the business. Shares in companies with a track record of regular payments are known as [Dividend stocks].
How are dividends paid?
Dividends are paid per share, usually as cash into your investment account, after the company's board of directors approves the payment. Each dividend follows a few key dates:
- Declaration date: the company announces the dividend, including the amount per share and the payment date.
- Ex-dividend date: the cut-off day that decides who receives the payment. You need to own the shares before this date to qualify. Shares bought on or after it don't receive that dividend.
- Record date: the day the company checks its records to confirm which shareholders are eligible. It's usually one business day after the ex-dividend date.
- Payment date: the day the dividend is actually paid to eligible shareholders.
On Mintos, dividends are credited automatically to your account as available cash after any withholding tax (tax deducted at source before the payment reaches you). You're notified when a dividend is credited, and it appears in your transaction history. If you hold a fraction of a share, you receive a proportional part of the dividend.
How often are dividends paid?
Dividends are most commonly paid quarterly, but the schedule varies by company and country. Many US companies pay every quarter, while many European companies pay once or twice a year. A small number of companies pay monthly.
Some companies also pay a one-off special dividend, an extra payment outside their usual schedule, for example after an unusually strong year. The company announces the timing of every payment in advance.
Do all stocks pay dividends?
No, many stocks don't pay dividends at all. Growth companies, especially younger businesses, often reinvest all their profits into expansion, research, or new products instead of paying shareholders.
Investors in these companies hope to benefit from a rising share price rather than regular income. Neither approach is better by default, and both carry risk.
What is dividend reinvestment?
Dividend reinvestment means using the dividends you receive to buy more shares, instead of keeping them as cash. Over time, this means your future dividends are paid on a larger number of shares, which can help your holdings grow.
Some brokers offer automatic reinvestment plans, often called DRIPs (dividend reinvestment plans). On Mintos, dividends are paid out as cash, which you can choose to reinvest yourself. See [How to invest in stocks] for how buying works.
Are dividends guaranteed?
No, dividends are never guaranteed. A company can reduce, pause, or stop its dividend at any time, most often when profits fall, or it needs cash for other purposes. Past dividend payments don't promise future ones.
Taxes can also reduce what you receive, depending on where the company is based and where you live. And receiving dividends doesn't protect you from a fall in the share price, so you could still lose some or all of the money you invest.
This article is for educational purposes only and is not investment advice. The value of investments can go down as well as up.