What Are Dividends?

Dividends: Getting Paid to Own Shares

A dividend is a share of a company's profits paid to shareholders. It is one of the two main ways you make money from stocks (the other being share price appreciation).

How Dividends Work

1. The company earns profits
2. The board of directors decides to share some profits with shareholders
3. They declare a dividend per share (e.g., KES 1.00 per share)
4. If you own 1,000 shares, you receive KES 1,000

Key Dividend Dates

• Declaration date — When the company announces the dividend
• Ex-dividend date — You must own shares BEFORE this date to get the dividend
• Record date — The company checks who owns shares
• Payment date — When you receive the money

Dividend Yield

Dividend yield = Annual dividend per share / Share price

Example: If a stock pays KES 2 annually and the price is KES 40, the dividend yield is 5% (2/40).