{"id":897,"date":"2019-10-31T10:40:44","date_gmt":"2019-10-31T10:40:44","guid":{"rendered":"https:\/\/www.indwe.co.za\/indwe-blog\/?p=897"},"modified":"2019-10-31T10:43:34","modified_gmt":"2019-10-31T10:43:34","slug":"dividends-2-0-the-basics-in-dividends","status":"publish","type":"post","link":"https:\/\/www.indwe.co.za\/indwe-blog\/dividends-2-0-the-basics-in-dividends\/","title":{"rendered":"Dividends 2.0: The basics in dividends"},"content":{"rendered":"

We’ve decided to go back to basics and reintroduce dividends in a two-part series, where we will be sharing what we believe you need to know about dividends and understanding the components in passive income.<\/p>\n

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What are dividends, how do you earn them and what can you do with them?<\/strong><\/p>\n

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They are payments made by listed companies as well as certain Exchange Traded Funds, as a reward to shareholders for their investment. They are essentially your cut of the profits. Remember when you own shares you don\u2019t just own them in the hopes of the price going up, you own a small share (hence the name) of the company.<\/p>\n

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Dividends usually get paid out of the net profit after taxes, and after part of that has been set aside in retained earnings for future expansion projects the company has scheduled.<\/p>\n

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Dividends can be paid either as a cash distribution or as a reinvestment. The default is usually a cash payment. For this you won\u2019t receive any prior notification, you would simply log in to see the dividends paid into your EasyEquities<\/a> account. If it is a share reinvestment, then our corporate actions team will contact you via email before the time to ask you to elect between receiving cash or receiving a reinvestment.<\/p>\n

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Do all companies pay dividends? Are you entitled to dividends simply by owning shares?<\/strong><\/p>\n

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While companies often pay in good faith to keep their shareholders happy, they are not obliged to pay dividends. A substantial dividend payout can be interpreted in two ways: either it means the company is doing well and has profits to share. Or it means they don\u2019t have any expansion projects on the horizon, which could signal a share price drop, sometime soon.<\/p>\n

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Larger, established companies (AKA Blue Chip Stocks) usually pay predictable, regular dividends, whereas smaller companies, like a tech start-up for example, may not pay dividends as regularly as its profits are still volatile. Even if it is making profits, the company is likely reinvesting them into expansion projects.<\/p>\n

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How can I use my dividends?<\/strong><\/p>\n

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Here\u2019s what we might do with ours:<\/p>\n

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