Investment is one of the options that can be chosen to prepare emergency funds in addition to saving. Investment is a form of passive income. The form of investment that is often used and known by the public is stock investment. By investing in shares in a company, a person is also entitled to dividends given by the company. Dividend distribution by the company is one of the things that is considered by an investor, a person who invests in a company, when he wants to buy shares in a particular company. So what is a dividend and how it works will be described in this article to enrich our common knowledge.
Dividends are a form distributed by a company for the profits earned in the company's activities to investors in accordance with the number of shares owned. Dividends can be distributed by the company to investors in the form of cash or additional shares. Dividends distributed in the form of additional shares in lieu of cash dividends can make the company able to increase retained earnings which inadvertently results in excess liquidity and creates a conflict of interest between shareholders and managers.
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