Johnny has invested in 10 shares of a big name electronics company. Each share is worth $150.28, and the company pays Johnny $2.13 for each share that he owns. With his 10 shares he earns $21.30 per year. What is this type of earning called

Question

Babbles

Business

13 January, 13:18

Johnny has invested in 10 shares of a big name electronics company. Each share is worth $150.28, and the company pays Johnny $2.13 for each share that he owns. With his 10 shares he earns $21.30 per year. What is this type of earning called

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Answers (1)

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Alejandra Robinson · Answer 1

Dividend income.

Explanation:

Dividend income is the income that is earned by shareholders of a business. It is part of the companie's profit that is given to the business owners. The rest is pit back into the business as retained earnings.

In this scenario Johnny has 10 shares in an electronics company, so he has a stake in the company and is entitled to a share of company profits.

Each share earns $2.13, so he earns a total of $21.30 per year from his shares.

This is referred to as dividend income.