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Shares Made Simple: A beginner's guide to the stock market by Rodney Hobson

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Chapter 4: What’s In It For Me?

You’ve invested your money and you naturally want something in return. There are three ways you can benefit from a stock market investment:

  1. dividends
  2. capital gains
  3. shareholder perks

Dividends

Most companies pay dividends, which come out of their profits. This is similar to receiving interest from a savings account in a bank. You get a flow of income without touching the capital invested.

If you want to invest for income, say you are retired and want to put your nest egg where it will provide you with a regular supply of cash to live on, then you will look for companies paying a dividend that is increased year by year. This is known as a progressive dividend.

Dividends are paid out of what are called ...

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