What are Dividends?
Dividends are the portion of a company’s profit that is distributed to its shareholders. If you own shares of a company that pays dividends, you receive money periodically without having to sell your shares.
How does it work?
- The company makes a profit in the quarter/year
- The board decides to distribute part of that profit
- Those who held shares on the “ex-date” receive the dividends
- The money is directly deposited into your brokerage account
Dividends in Brazil
- They are exempt from Income Tax for individuals
- Brazilian companies are required to distribute at least 25% of their profit
- Sectors that pay the most: banks, electricity companies, telecommunications
Practical example
If you own 100 shares of a company that pays R$ 2.00 per share in dividends:
- You receive: 100 × R$ 2.00 = R$ 200.00
- Without selling any shares
- Without paying taxes
Dividend strategy
Many investors build portfolios focused on dividends to generate passive monthly income. With R$ 500,000 invested in good payers, it’s possible to receive R$ 3,000-5,000/month.