What is a dividend?

A dividend is a way that a company rewards its shareholders. A company can use excess profits or its reserves to pay out dividends. However, it is not mandatory for it to pay dividends every year. A company could also utilise funds to invest in a new or an existing project if it promises better returns. In such a case, it may declare no or lower dividend. To get the benefit of dividend, an investor must own the shares before the ex-dividend date, which is specified by the company. To know, more watch this video on dividends.

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