Dividends refer to that part of a company’s profit which are distributed to the shareholders. These are paid out of the net earnings. The alternative to the payment of dividends is the retention of net income/earnings. The retained profit represent an easily available source of internal funds. There is a type of contrary link between retained earnings and cash dividends, i.e. the bigger the retentions, lesser the dividends or smaller the retained earnings, bigger the dividends.
Investors have long loved stocks with stable dividend because a consistent income stream can help counteract some of the market’s short-term fits and starts. Even better: When the market bounces back, dividend stocks are seen as a bonus with purchase, providing price appreciation as well as the regular cash distribution.
Source: Potential Trader
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Investors Appreciate Stable Dividend Stocks
Posted by D4L | Friday, September 14, 2012 | ArticleLinks | 0 comments »________________________________________________________________
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