Many people know about investing in the stock market for capital gains, mainly to buy low and sell high. However, investing in stocks can also be profitable by collecting dividends from stocks. Dividends not only boost the returns of the investments but can also be used to generate passive income streams, see 5 Reasons Why You Should Invest In Dividend Stocks.
What are Dividends?
Dividends are basically payments made by Companies to the shareholders to reward them for owning the shares. Companies are setup for purpose of making a profit and when a Company makes profit, it can choose to either 1) Retain it in the business for reinvestment purposes or working capital 2) Pay out to shareholders as Dividends. When you buy shares in the companies, you basically become a partial owner of the Company, so you will be entitled to these Dividends.
Why Do Companies Pay …