Understanding Dividends Quiz

What is a dividend?

• A loan a company takes

• A portion of profit shared with shareholders

• A type of bond

• A tax paid by investors

Which companies are more likely to pay dividends?

• Startups

• Tech companies focused on growth

• Established companies with consistent profits

• All companies

What does DRIP stand for?

• Direct Rate Investment Program

• Dividend Reinvestment Plan

• Deferred Return Interest Plan

• Discount Return Investment Program

What is the formula for dividend yield?

• Share Price ÷ Earnings

• Dividend per Share ÷ Share Price

• Net Income ÷ Total Assets

• Revenue ÷ Shares Outstanding

If a company pays $1 in dividends and its stock is $25, what’s the yield?

• 2%

• 4%

• 5%

• 8%

What is a payout ratio?

• The number of shares a company pays

• The percentage of earnings paid as dividends

• The percentage of debt paid off

• The annual return rate

A Dividend Aristocrat is a company that has:

• Paid dividends for 5 years

• Increased dividends for 25+ consecutive years

• A dividend yield of 10%+

• Government approval to issue dividends

What’s a risk of chasing high dividend yields?

• The company may cut dividends

• The stock might be overvalued

• The company might not grow

• All of the above

Reinvesting dividends is good because:

• You pay fewer taxes

• It gives you voting rights

• It allows compounding over time

• It’s required by law

Which tool can help you screen for dividend-paying stocks?

• TurboTax

• Robinhood’s Blog

• Dividend.com

• IRS.gov