Why are dividends important?

[Suba]

Shareholders will not only gain profits from the potential value appreciation when the value or price of the shares you buy increases, but they will also receive dividends, which are company profits distributed to shareholders according to the number of shares owned. In general, dividends will be distributed once a year or will depend on company policy. The amount of dividends to be distributed is determined by the accountant or internal auditor approved by the board of directors. Furthermore, the amount of dividends will be decided at the general meeting of shareholders.

 

[Goldynn89]

It's all about the consistent returns a shareholder can receive, but it also is used as a measure of how well the company is doing which will attract other investors or push them away.

 

[Suba]

The dividend paid out is an indicator of the financial health of the company, and it is also a way to get additional media coverage. Companies which are making a loss will usually not pay a dividend.

True, apart from that, we can also use dividends as a more reliable parameter for evaluating equity, dividends are also more credible, reflecting the issuer's company performing poorly or well, because to pay dividends the issuer needs cash.