What is the dividend?

By | January 29, 2017

Dividend is the amount of free cash flow that the company pays back to its shareholders/owners. When it comes to free cash flow, the company has 2 main options to spend this amount of money, they can re-invest into current business to make a bigger return or pay back to shareholders via divined stocks. Some investor prefer the option 1 which is company’s management team will re-invest free cash flow into current business, it can be spend more for R&D activities for more patent, invest in marketing & sales for better revenue, M&A to gain more market share. If the company paid dividend to investor then they have to use this money to invest by themselves and hopefully it bring back good return.

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