We are tackling the thorny subject of Dividends. Is it free money? Or are you just moving money from one pocket to the other? Check out what we're talking about in here and you'll see exactly why and more importantly an even better way of helping you generate more income on your investments.

A DIVIDEND is the distribution of some of a company's earnings to a class of its shareholders, as determined by the company's board of directors. Common shareholders of dividend-paying companies are typically eligible as long as they own the stock before the ex-dividend date. Dividends may be paid out as cash or in the form of additional stock. It is basically a token reward paid to the shareholders for their investment in a company’s equity, and it usually originates from the company's net profits.

While the major portion of the profits is kept within the company as retained earnings–which represent the money to be used for the company’s ongoing and future business activities–the remainder can be allocated to the shareholders as a dividend. At times, companies may still make dividend payments even when they don’t make suitable profits. They may do so to maintain their established track record of making regular dividend payments.

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