Dividends

Dividends Definition

Dividends can be explained as a payout from a company to its shareholders. Almost all companies which generate revenue will use dividends to remunerate shareholders. Shareholders can either be investors who bought them or employees who earned them instead of cash. Dividends are normally paid in cash and the amount paid per share will depend on a number of factors.

The key factors considered when deciding on the dividend amount would be the performance of the company, the number of shares in circulation, number of shareholders, budgets and planned expenditure. If a company has planned expenses or doesn’t perform well, it’s a given that it shouldn’t extract more than what the business needs to keep running in good standing.

Dividend payouts should be decided by the board of directors. Any publicly listed company that you would encounter on a trading platform such as cTrader will certainly have an experienced board of directors who are qualified to make important decisions such as this. In smaller, privately owned companies the parties involved and the decision-making process can look very different. For example, a company has one director and one shareholder and they are the same person. This person can decide whatever that want. However, it’s highly unlikely you will ever trade the shares of a company like this.

As cTrader is a multi-asset class trading platform, some brokers offer single stock CFDs. They may also pay dividends to traders who have entered a long position prior to the Ex-dividend Date. You can see if a broker is paying dividends and when for each stock symbol inside the Symbol Info section in cTrader.