How Dividends Work — Turning Growth into Passive Income
What Are Dividends?
Dividends are the part of a company’s profit paid directly to shareholders — often quarterly in the U.S. and Europe.
They’re the simplest way to earn passive income from your investments without selling shares.
Let’s take Apple (AAPL) as an example. It currently offers around 0.5% dividend yield — modest but stable.
Example: You Invest $10,000
Apple (AAPL) offers a ~0.5% dividend yield — small but steady.
| Component | Value | Explanation |
|---|---|---|
| 100 shares х $100 | $10,000 | Initial investment |
| Price after one year | $120/share | Unrealized gain = $2,000 |
| Dividend | $5/share × 100 = $500 | Real cash income |
| Total value | $12,500 | $12,000 “on paper” + $500 cash |
That $500 is real money — you can withdraw or reinvest it.
If you choose DRIP (Dividend Reinvestment Plan), your dividends automatically buy more shares, compounding future growth.
Quick Formula
Dividend Yield = (Annual Dividend ÷ Current Price) × 100%
Example:
If a stock pays $2 in annual dividends and trades at $40,
Dividend Yield = (2 / 40) × 100% = 5%
So if you invested $1,000, you’d earn about $50/year in cash dividends.
FinImpulse Insight:
Even a 1–3% yield can add steady income to a growth portfolio.
We provide the data — you decide what’s right.
