{"id":24599,"date":"2026-04-27T21:46:33","date_gmt":"2026-04-27T21:46:33","guid":{"rendered":"https:\/\/incredipros.com\/?p=24599"},"modified":"2026-04-27T21:46:34","modified_gmt":"2026-04-27T21:46:34","slug":"what-are-dividends-ramsey","status":"publish","type":"post","link":"https:\/\/incredipros.com\/?p=24599","title":{"rendered":"What Are Dividends? – Ramsey"},"content":{"rendered":"
\n

Ever heard the saying, \u201cIt pays dividends.\u201d Nine times out of 10 that means you\u2019ve probably just been given a nudge to do something now that might pay off later. But what are dividends? And how do dividends work?\n <\/p>\n

\n

Market chaos, inflation, your future\u2014work with a pro to navigate this stuff.<\/p>\n<\/p><\/div>\n

Dividends are payments companies make to their stockholders to share their profits<\/strong>. Typically paid quarterly, dividends are like a reward for investing your money into a company\u2019s venture. See? You invest with us now, and we\u2019ll give you something\u2014a dividend\u2014later.\n <\/p>\n

Companies usually pay out dividends in cash. But there are other types of dividends you could receive, including stock dividends and opportunities to do some dividend investing. We’ll get to all that in a minute. But first, let\u2019s take a look at how dividends work.\n <\/p>\n

How Are Dividends Paid?<\/h2>\n

Dividends are like the cherry on top for investors\u2014a little something extra to sweeten the deal. But why do companies shell out dividends? What\u2019s the motivation?\n <\/p>\n

For starters, it\u2019s a way of rewarding investors for putting their trust\u2014and more importantly, their cash\u2014in the company. Dividends also tend to have a positive effect on an investor\u2019s outlook on the company. If you\u2019re consistently getting paid good dividends, you\u2019re probably going to be a pretty loyal investor! Let\u2019s look at a basic example.\n <\/p>\n

Say you buy 10 shares of Acme Inc. and Acme has a strong quarter selling widgets. At the end of the quarter, Acme announces a $1 dividend per share, so you get a $10 dividend payment. If Acme does this each quarter for a year, you\u2019ll end up with a total dividend of $40. Those funds are usually paid straight into your brokerage account. Pretty simple, right?\n <\/p>\n

But not all stocks pay dividends. Some companies decide to reinvest their profits in their company rather than paying dividends. The company\u2019s board of directors makes the call on how the company pays its dividends, how much to pay and how frequently they\u2019re paid out\u2014monthly, quarterly (most common in the U.S.) or annually. The catch is that the board also has to get shareholder approval through a vote on the distribution of the dividends. That means the same people potentially receiving dividends are the same people voting on how they\u2019re given out.\n <\/p>\n

Let\u2019s take a look at all the types of dividends you can earn.\n <\/p>\n

Types of Dividends<\/h2>\n

There are five main types of dividends you\u2019re likely to encounter when investing:\n <\/p>\n