What are dividends?

devidenAlthough we possess no shares in a company, we may be familiar with the term dividends, you hear constantly in the media, but not everyone really clear what we mean when we refer to dividends.

But who are shareholders do know, and it is not surprising, since dividends are the profits that provides them being in possession of shares in a company. When a company makes profits, part of the same people usually reinvest in their development and other party intended to deliver benefits to shareholders.

Which part is devoted to each item will usually determined by the laws of each country, which often limit the distribution of dividends to shareholders forcing companies to reinvest always a part of the benefits themselves, to ensure continuity of them and prevent them from being in a situation of capitalization.

Respecting this limit, and the company will be determined by how benefits are distributed, always taking care to maintain the balance between the two games. Shareholders do not always receive their dividends in cash, but often do so in company stock.

If we decide to acquire shares of a company, it is important to look at the percentage of their benefits is intended to operate, since the higher the percentage, the greater our dividend. However, in making these accounts must not forget the fact that whenever we receive income for this purpose over a thousand per year, will be taxed on the capital gain, namely 18% of the value of it. Therefore, depending on our investment capacity, we need to make numbers and determine what would be the best investment for us.

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