Dividends |
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When a public company turns a profit, it elects to do one of two things with that money: It may (1) reinvest the profits in its own business, or (2) distribute the profits to shareholders in the form of dividends. Most younger companies elect to reinvest their profits in themselves in order to provide (hopefully) growth, while older and larger companies tend to pay out the profits to shareholders as dividends. Certain companies, such as real estate investment trusts (REITs), are chiefly organized with larger-than-average dividend payments as their main objective. |
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