Definition

A payment made by a company to shareholders in the form of additional shares rather than cash, increasing your investment without spending money.

What to consider

  • Consider reinvesting dividends to grow your holdings over time.
  • Keep an eye on the consistency of dividend payments.
  • Factor dividends into your overall investment strategy.

Real world scenarios

  • Each quarter, Bryce receives additional shares from a utilities company that pays stock dividends. This reinvestment increases his overall stake.
  • Emma weighs stock dividend announcements before investing, preferring companies with a steady payout history.
  • A sudden spike in dividends signals to Matteo that the company is performing well but also prompts him to check sustainability long term.

Related terms

Investments & Retirement