Dividend Recap: How PE Firms Cash Out Without Selling
Warren Team
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Key terms
- DividendA portion of a company's earnings distributed to shareholders, typically paid quarterly. Dividends provide a steady income stream in addition to potential stock price appreciation.
- Cash FlowThe net amount of cash moving in and out of your accounts. Positive cash flow means you're earning more than you're spending, while negative cash flow indicates you're spending more than you earn.
- Dividend YieldAnnual dividend payment divided by the stock price, expressed as a percentage. A 5% dividend yield means the stock pays $5 annually for every $100 invested.
- Short SellingBorrowing shares to sell, hoping to buy them back at a lower price for profit. Highly risky as losses can be unlimited if the stock price rises instead of falls.
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