Dividend Payout Option

Dividend Payout Option

Dividend payouts are one of the two usual options open to an investor when it comes to dividends generated on investment holdings. The dividend payout is the generated cash that a corporation issued to a shareholder as a dividend on the total number of shares. Depending on the structure of the stock issue, the dividend payout may involve all the net profit generated during the fiscal year, or be a portion of the net profit.

As an alternative to a dividend payout, shareholders may choose to take advantage of what is known as a dividend reinvestment. This option often allows the shareholder to place thedividend payment into a special account that is used to buy additional shares of stock when and as they become available. Using this option instead of a dividend payout allows the investor to incrementally increase his or her interest in the company.