Dividends03.26.08

When a company makes profit in its operations annually or in a quarter, it pays dividend to the investors who hold stocks in the company. The amount of dividend you get on a company stock will depend on a lot of factors like how much money is being set aside for dividend payments, how many stock investors the company has and how much stock you own. If a large number of investors are there, the dividend paid per share will be very less and those with a higher number of stocks get higher dividends, but the payout per share is usually equal.

The frequency of dividend payouts differ from company to company. While theoretically they can pay dividends every quarter since thats the time they file their profit and loss reports. While most companies pay annually, the time gap between two dividends show the profiability of the companies business and financial strength.

A company pays dividends to usually to thank its investors and to incite others to invest in it since paying dividends is closely associated with the financial well being of the company. This will bring in more investors and hence drive the share value of the company stocks.

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