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Nicholes Wong
07 Mar 2019
Diploma in Business Management at Nanyang Polytechnic
So when you buy stocks, you own a part of the company. A dividend is a payment made by a company to its shareholders, usually as a distribution of profits.
Yes, company will announce in advance before they pay dividends.
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In order to get dividends, you must own a part of a company/mutual fund/exchange traded fund.
Here is the definition given by investopedia: "A dividend is the distribution of reward from a portion of company's earnings and is paid to a class of its shareholders. Dividends are decided and managed by the company’s board of directors, though they must be approved by the shareholders through their voting rights. Dividends can be issued as cash payments, as shares of stock, or other property, though cash dividends are the most common. Along with companies, various mutual funds and exchange traded funds (ETF) also pay dividends."
Hope that clarifies.