What is a dividend?

A dividend is a share of the company's profits

When a company earns more money than it needs to run and grow, it can return some of that surplus to its shareholders. These payments are called dividends. They are typically paid quarterly, four times per year, and expressed as a fixed amount per share.

Example: if Apple pays a dividend of 0.25 USD per share each quarter, and you hold 2 shares, you receive 0.50 USD every three months, simply for owning the stock. No action required.

Which companies pay dividends?

Not all companies pay dividends. Large, established companies with stable profits, often called blue-chip stocks, are the most reliable payers. Companies in rapid growth mode tend to reinvest all their profits rather than distribute them.

Well-known dividend payers available on Amarah include Apple, Microsoft, Johnson & Johnson, Coca-Cola, and Visa. Most large ETFs like VOO also distribute dividends quarterly, consolidated from all the companies inside the fund.

Three dates that matter

Dividends follow a specific schedule. Three dates determine who gets paid:

• Declaration date: the company announces it will pay a dividend and states the amount per share
• Ex-dividend date: you must own the stock BEFORE this date to receive the upcoming payment; buying on or after this date means you miss it
• Payment date: the actual date the cash arrives in your account

Understanding dividend yield

Dividend yield tells you what percentage of the stock price you receive in dividends per year. If a stock costs 100 USD and pays 3 USD per year in dividends, the yield is 3%.

A high yield can be a sign of a generous company, or a sign that the stock price has fallen because the business is struggling. Always check whether the company can sustainably maintain its dividend. A cut to the dividend is a significant negative signal.

Dividends on fractional shares

With Amarah's fractional shares, you receive dividends exactly proportional to your ownership. Own 0.1 shares of a company paying 1.00 USD per share? You receive 0.10 USD. Small amounts individually, but they compound over time and are automatically credited to your Amarah balance, ready to reinvest.

This compounding effect is powerful over the long term. A stock returning 7% in price growth plus 3% in dividends delivers 10% total annual return. After 20 years, that difference versus a 7% return alone is nearly double the ending balance.