Dividends

Tolu Updated by Tolu

Dividends

Another good way to know if a company is worth investing in is to look at its dividend. A dividend is a share of a company’s profit that it pays to its shareholders. Not every company pays out dividends but if you’re looking to make occasional passive income, investing in one that does would be a good idea. Large companies who make steady profits typically pay the best dividends while companies who are in their early stages may be unable to issue dividends for a while. 

If the company you’re interested in pays dividends, you should observe its dividend yield over the past few years. A sudden increase may not always be a good sign, especially when you can’t point to any obvious positive reason from your research on the company.

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Price to Earnings Ratio (P/E ratio)

Earnings Before Interest, Tax, Depreciation & Amortization (EBITDA)

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