{"id":795,"date":"2012-07-12T09:12:42","date_gmt":"2012-07-12T01:12:42","guid":{"rendered":"http:\/\/www.imoney.my\/?p=795"},"modified":"2025-04-08T16:30:54","modified_gmt":"2025-04-08T08:30:54","slug":"what-is-dividend","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/what-is-dividend","title":{"rendered":"What Is Dividend?"},"content":{"rendered":"<p>A dividend is a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits. Sounds complicated? Read on!<\/p>\n<h2>An example of how dividend works<\/h2>\n<p>Say you want to start a pizza business. You need some capital, and you realise your life savings isn&#8217;t quite enough. So, you go about raising some money from investors, and in return for investing in your pizza business, you issue some shares to these investors.<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-796\" title=\"Dividend\" src=\"\/articles\/wp-content\/uploads\/2012\/07\/Dividend-300x180.png\" alt=\"\" width=\"300\" height=\"180\" srcset=\"\/articles\/wp-content\/uploads\/2012\/07\/Dividend-300x180.png 300w, \/articles\/wp-content\/uploads\/2012\/07\/Dividend.png 754w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>Your first pizza shop is a huge success and makes a lot of money. You reinvest the profits and open more shops. This continues for a number of years, and eventually, your business is at a point where your biggest competitors are your own pizza shops (this is also known as market saturation).<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-797\" title=\"Dividend-2\" src=\"\/articles\/wp-content\/uploads\/2012\/07\/Dividend-2-300x180.png\" alt=\"\" width=\"300\" height=\"180\" srcset=\"\/articles\/wp-content\/uploads\/2012\/07\/Dividend-2-300x180.png 300w, \/articles\/wp-content\/uploads\/2012\/07\/Dividend-2.png 866w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><br \/>\nAt this point, you are sure you can continue to make a lot of money from pizza sales. So, you start <strong>paying back part of the profits to investors.<\/strong> This &#8220;profit payout&#8221; back to investors is essentially what a <strong>dividend<\/strong> is.<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-798\" title=\"Dividend-3\" src=\"\/articles\/wp-content\/uploads\/2012\/07\/Dividend-3-300x170.png\" alt=\"\" width=\"300\" height=\"170\" srcset=\"\/articles\/wp-content\/uploads\/2012\/07\/Dividend-3-300x170.png 300w, \/articles\/wp-content\/uploads\/2012\/07\/Dividend-3.png 866w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><br \/>\nDividends can vary depending on how well a business performs.\u00a0A company generally starts to pay out dividends to its shareholders when the company\u2019s growth start to slow. Dividend rates can vary depending on which industry the company is in. For example, telecommunications \/\u00a0utilities\u00a0companies and real estate investment trusts (REITs) typically pay out higher dividends, while internet \/ e-commerce and biotech companies pay less (sometimes none!).<\/p>\n<p>Now &#8211; you may ask, is investing in shares a form of gambling? Read our\u00a0<a href=\"https:\/\/www.imoney.my\/articles\/investing-in-shares-for-beginners\">beginner&#8217;s guide to\u00a0investing in shares<\/a> to find out!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Two common questions investors ask are &#8211; what is dividend, and why companies pay out dividends. Find out the answers here.<\/p>\n","protected":false},"author":1,"featured_media":16573,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[305],"class_list":["post-795","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment","tag-fb"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What Is Dividend<\/title>\n<meta name=\"description\" content=\"Two common questions investors ask are - what is dividend, and why companies pay out dividends. 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