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How do dividends work in stock trading?

» General Trading
  • Dividends are payments made by a company to its shareholders, usually derived from profits.
  • When a stock is declared ex-dividend, new buyers no longer qualify for the upcoming dividend payment.
  • Dividends can be reinvested to purchase more shares, compounding the investment over time.

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How do dividends work in stock trading?

So I've been trying to wrap my head around this whole dividend thing with stocks. Basically, what I'm wondering is how exactly do dividends work when you're trading stocks? Do you get them just for holding certain stocks, or is there more to it? And say you do get dividends, how are they paid out to you – is it like a direct deposit to your account or something? Plus, how do companies decide how much to pay out and when do they usually do it? I'm also curious about whether all stocks even offer dividends or if it's just specific ones. If anyone's got the lowdown on this, I'd really appreciate the insight.

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