How Often Are Dividends Paid To Shareholders?

How Often Are Dividends Paid To Shareholders?

Investing in the financial markets can be a very rewarding experience. Investors that have clearly defined goals and a plan to accomplish those goals can see their wealth gradually increase. For stock investors, there are two primary ways of benefiting from stock market investments - capital appreciation and dividends. 

Dividends refer to the cash paid out to shareholders that have held the shares long enough to qualify for a dividend payment, which is primarily paid out from the earnings of the company. In some cases, companies may incur debt to keep their dividend payments increasing year-over-year. 

But how do dividends work and how often are they paid out to shareholders? The answer to this question may vary, as stocks are not the only financial instruments that qualify investors for dividends and even stocks may differ in their dividend payment frequency. 

Another key consideration is the fact that not all companies listed on an exchange will pay out dividends - most companies do not. 

Large, well-established companies with consistent revenue streams and decent profit margins have the luxury of rewarding their long-standing investors for holding on to their positions regardless of market conditions. 

In this article, we will look at how dividends are paid and how often shareholders can expect to receive these payments. 

How Do Dividend Payments Work?

The general process of a company declaring and paying dividends is a multi-step process, which involves the decisions of the upper management of the company, who decide whether to pay and how much to pay in dividends in a given period of time:

  • The company's board of directors decides to issue stock dividends and declares a dividend rate, which is typically expressed as a percentage of the existing shares held by shareholders. For example, a company might declare a 2% stock dividend
  • The board of directors also sets a record date, which is the date on which shareholders must be on the company's books to be eligible to receive the stock dividend. Anyone who buys shares after this date will not receive the dividend
  • The ex-dividend date is when the stock starts trading without the right to receive the upcoming dividend. Investors who buy shares on or after this date will not receive the dividend
  • On the distribution date, which is typically a few weeks after the record date, the company issues additional shares to shareholders who are eligible for the stock dividend. These shares are usually credited to the shareholders’ brokerage accounts 
  • The share price is slightly adjusted to reflect the dividend payout 

Companies may choose different time frames to issue dividends. However, these should remain consistent for as long as the company plans on paying dividends to shareholders. 

How Often Do Companies Pay Dividends?

The typical frequency of a dividend payment is once per quarter. However, some companies may choose to pay biannually. 

Quarterly payments are especially convenient for investors, as most companies also release their earnings on a quarterly basis. Receiving dividends with the same frequency gives investors much more room to work with when it comes to evaluating their investments and making adjustments to their portfolios. 

Dividends paid out during a specific period originate from the retained earnings of the period accounting year, which allows the management to forecast future dividends, while investors decide whether the next dividend will be able to match their expectations. 

However, some companies may have more irregular dividend payments, such as annual, or monthly dividends. While typically not the norm, sporadic dividend payments are also possible. 

These dividends are not part of a consistent dividend policy and are typically paid in response to specific events, such as a company's exceptional earnings or the sale of assets. 

How Much Should You Expect To Be Paid In Dividends?

Dividend payments are typically quite limited, as most public companies have vast shareholder bases and the funds set aside for dividends are thinly distributed. 

Most companies have an annual dividend yield of between 0.5-2%, which is the percentage return you will receive on your share position if you hold it in your portfolio for a year. 

While this may seem like very little, it does help some major corporations with slow share price growth to boost the annual returns for their shareholders. 

Companies, such as Coca-Cola and Walmart, are known for their slow growth and reliable dividends. 

Each stock that pays dividends will have figures such as dividend per share and annual dividend yield, which you can use to decide whether the dividends paid on a particular stock can meet your financial objectives. 

Pros & Cons Of Dividend Investing

Dividend investing is an investment strategy that comes with its fair share of benefits and risks. To help you decide whether dividend investing is right for you, it is important to consider the many pros and cons of dividend investing. 


  • Steady income source - Most companies pay dividends at a stable rate, which gives you the ability to make plans and predict your future dividend cash flows 
  • Growth potential - Companies that consistently pay dividends are often well-established and financially stable. These companies tend to have a history of solid performance, which can lead to potential capital appreciation over time
  • Dividend reinvestment - Many dividend reinvestment programs (DRIPs) allow investors to automatically reinvest their dividends back into the company's stock. This can lead to compound growth over the long term
  • Lower volatility - Dividend-paying stocks are typically less volatile than their counterparts, which can introduce some stability to your portfolio
  • Diversification - Dividends can be a great way to diversify your income sources


  • Limited growth potential - While dividend-paying stocks can offer steady income, they might not experience the same level of rapid growth as high-growth stocks. This could lead to missing out on potential capital appreciation
  • Interest rates - Dividend income may become less attractive when interest rates rise, as bonds and compound-interest accounts will offer a much more stable source of income 
  • Tax implications - Dividend income is often subject to taxes, and the tax treatment can vary depending on factors such as your country of residence and the type of account you're investing through
  • Dependency on dividends - Relying heavily on dividend income can limit your investment options, as you may prioritize dividend-paying stocks over those with high growth potential 
  • Market fluctuations - While dividend-paying stocks may be relatively stable, they are nonetheless subject to market volatility, which can cause capital losses to offset your dividend income 

Key Takeaways From How Often Are Dividends Paid To Shareholders

  • Many mature companies on the stock market pay dividends to their shareholders to reward them for holding the company’s stock in their portfolio 
  • Dividends are typically paid on a quarterly basis, but some companies may pay biannually or annually
  • Dividends can add a degree of stability to a portfolio, as a majority of dividend-paying stocks are characterized by relatively low volatility 
  • The attractiveness of dividends can depend on interest rates, as high interest rates make bonds a more viable investment option 

FAQs On Dividends Paid To Shareholders

What are stock dividends?

Dividends are cash payments made by companies to their shareholders to reward them for investing in the stock and holding it in their portfolios for a set duration of time. Dividends are generally paid by stable companies that are consistently profitable year after year. 

How often do companies pay dividends?

Companies typically pay dividends on a quarterly basis, but some may pay annually or biannually. In certain circumstances, companies may also issue a surprise dividend as a means to return surplus cash to shareholders. 

Can I invest my dividends in stocks?

Yes. Dividend reinvestment plans allow shareholders to reinvest their dividends by exchanging them into additional shares, which can help grow the size of the overall position.