Dividend

What is a dividend?

A dividend is money a company pays to people who own its shares. When a company makes a profit, it can either reinvest that money or share some of it with shareholders. The share they pay out is the dividend.

How often are dividends paid?

Most UK companies pay dividends twice a year. Some pay quarterly. Some don’t pay dividends at all, especially smaller or fast-growing companies that reinvest all their profits.

How do you receive dividends?

If you own shares or funds that pay dividends, the money usually appears in your account automatically. You can either take it as cash or reinvest it to buy more shares.

Do you pay tax on dividends?

Outside an ISA or SIPP, you may owe Dividend Tax on what you receive. The first £500 per year is tax-free.

Key points about dividends

• A share of company profits paid to shareholders
• Usually paid twice a year. Some companies pay quarterly, some don’t pay at all
• Tax-free in ISAs and SIPPs. Outside these, you may owe tax above £500