In-you invest times the profits and opens more stores
Dividends is an amount paid regularly (typically annually) by a company for the shareholders, using his income. Read below. Let's say you want to start a business pizza You need capital, and you realize that your accumulated is not yet sufficientSo you go to investors and get money from them, and replacement of the investing in your business pizza, give you some shares to investors. Your first pizza shop was a huge success and makes a lot of money.
The dividends may vary depending on how well a business
It was continued yet a few years, and eventually, your business will come to the state where your most major competitor is your own pizza shop (it is also known as market saturation). At this point, you are sure that you can continue to make a lot of money from sales of the pizza.
So, you started the payment again of part of the profits to investors.
It “profit pay-out” back to the investors is called dividends. A company will begin to pay dividends to shareholders when the company growth is beginning to slow down.
The rate of dividends is may vary depending on which industry it belongs.
For example, the telecommunications - utility companies and real estate investment trusts (REITs) will generally provide higher dividends, while the internet - e-commerce and Biotech companies are paying less (sometimes none.). Now - you can ask if the investment is in shares is a kind of gambling. Read our guide for the novice about investing in shares to find out.