Asset class - shares

Return on shares

Shares can provide two forms of return:

  1. Shares can pay cash dividends to investors. 
  2. In addition, the price of the share can increase or decrease in value. So shares can provide a capital gain or capital loss.

A dividend is where a company pays part of its profit to the shareholders. It is income to the shareholders. The dividends will vary depending on which company you buy shares in. Some shares may not pay dividends.

Some people may choose to reinvest the dividend entitlement into more shares. Therefore they do not receive cash dividends – they receive extra shares instead.

This is often referred to as a dividend reinvestment plan. It is not offered by all Australian companies.