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How can an investor make homemade dividends? Show with an illustration.

How can an investor make homemade dividends? Show with an illustration.

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Answer #1

Homemade dividend a type of dividend in which investor sale a part of their holding in order to realise dividend when dividend are not declared by the company in real.

An investor has certain cash flows objective and he wants to fulfill them through selling of stocks as a form of homemade dividend because when the company wants to be invest its profit, rather than giving dividend to the shareholder so share holder may realise homemade dividend by selling a part of his stake in the company and realising the required dividend. it is called homemade dividend.

if an investor is holding 1000 shares of Apple and he was the dividend of dollar 600 per year so he will be selling 2 shares of Apple in order to realise the required dividend. it is called homemade dividend.

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