The relevance of dividends

Before going further, let’s review what a dividend is.

The following is the definition from investopedia:

“A dividend is the distribution of reward from a portion of the company's earnings and is paid to a class of its shareholders. Dividends are decided and managed by the company’s board of directors.

Dividends provide a stable income stream that help to improve investment returns. While dividends are great for those investors, they are actually a good fit for regular investors as well. Here are a few of the key advantages of dividends: Dividends are actual income.”

Paying dividends for a company is not only good news for the shareholders but it also allowas it to send a strong message to potential investors. Indeed, the payment of dividends means that the company has sufficient cash to pay back its shareholders. In other words, the company shows that there is little doubt to have about its financials.

Dividends are ovisouly great for shareholders but you need to understand that you can never be sure about how much dividends you will receive in the future (expect the near future for which dividends have already been announced). In fact, a company can decide to stop paying dividends at any time. However, most companies that regularly pay dividends try their best to avoid this situation since the message sent to the investors could be disastrous. How much dividends could you expect to receive when you invest in Vietnamese stocks?

Well, once again it’s hard to know the future but what we can say for sure is that our clients, who decided to invest in Vietnamese shares, have received in average 5 to 6% dividend returns per year over the last couple of years.

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