What are Dividends?

Dividends are a portion of a company’s earnings that are often paid back to shareholders. To calculate the earnings that can be used, you take the revenue and subtract the fixed and variable expenses. You then take that total and subtract the expenditures on maintenance and growth. Depending on the company, they can decide whether to pay out dividends or inject them back into the company. More mature companies often can afford to pay out dividends while growing companies may reinvest it.