How Dividends Work

Dividends from common stock is one of the ways a company can spend its money. A dividend is paid based on the number of shares of common stock available. Your share is based on the number of shares you own. Dividends are cited on a per share basis; for example 12 cents per share. Dividends are normally paid out quarterly but can be paid out at any time. Sometimes a windfall dividend occurs in which you get a one-time payment. Note that dividends are not always paid in cash; sometimes the company pays out shares of stock.