Understanding Dividends: What They Are and How to Receive Them
Imagine receiving a sum of money in your account simply for being a shareholder of a company — without selling anything or making any transactions. This is essentially the logic behind dividends. For many investors, this income stream is one of the main attractions of the stock market, and understanding how it works is a crucial step in making more informed decisions.
However, like everything in the investment world, dividends have their rules, nuances, and — yes — risks. There is no guaranteed income, and a company that paid generous dividends one year may reduce or suspend payments the next. Therefore, before developing a dividend-based strategy, it’s worth understanding the mechanism behind them.
In this article, you will learn what dividends are, who can receive them, how taxation works in Brazil, the main ways to access this type of income, and what to consider before investing with this goal in mind.
What Are Dividends, Anyway?
Dividend is the portion of a company’s profit distributed to its shareholders. When a company closes an accounting period with a positive result, it can allocate part of this profit in two ways: reinvest in the business or distribute to the owners — that is, the shareholders.
In Brazil, the Corporate Law (Law No. 6,404/1976) establishes that publicly traded companies are required to distribute at least 25% of adjusted net profit to shareholders, unless otherwise stated in the bylaws. This minimum percentage is called the mandatory dividend. Each company can stipulate a higher percentage in its bylaws — some distribute 50%, 80%, or even more of the profit.
Besides traditional dividends, there is another form of distribution called Interest on Equity (JCP). JCP is deductible from the company’s income tax, making it advantageous from a fiscal standpoint for the company. For individual investors, however, JCP is subject to 15% withholding tax — unlike dividends, which, under current legislation, are exempt for Brazilian residents (check for any legislative changes with the Federal Revenue, as this topic has been under discussion in recent years).
Who Can Receive Dividends?
The answer is simpler than it seems: anyone who is a shareholder of a company at the time of the so-called “cut-off”. The process works like this:
- The company announces the distribution of dividends and sets a cut-off date (also called record date or ex-dividend date).
- Those who own the shares until the day before the ex-dividend date are entitled to receive the dividends.
- On the ex-dividend date, the shares usually open with the price adjusted downwards, reflecting the amount to be paid.
- The payment is made on the date set by the company, directly into the investor’s brokerage account.
This means you don’t need to be a large institutional investor. Any individual with an account at a brokerage firm registered with the CVM (Securities and Exchange Commission) can buy shares on B3 and, if they hold the position until the correct date, receive the corresponding dividends.
Main Ways to Receive Dividends
Shares of Companies Listed on B3
The most direct way is to buy shares of companies that regularly distribute dividends. In the Brazilian market, sectors such as electricity, sanitation, banks, and telecommunications historically have companies with more consistent dividend policies — but this is not a guarantee of future maintenance.
A widely used indicator to assess dividend return is the Dividend Yield (DY), calculated as follows:
DY = Dividends paid per share ÷ Current share price × 100
For example: if a share costs R$ 20.00 and paid R$ 1.00 in dividends in the last 12 months, the DY is 5%. However, this number is retrospective — it informs what was paid, not what will be paid.
Real Estate Investment Funds (FIIs)
FIIs are funds that invest in real estate or real estate securities and are legally required to distribute at least 95% of the cash result calculated semiannually (in practice, most distribute monthly). The income paid by FIIs to individuals who own less than 10% of the fund’s shares is exempt from income tax, provided the fund has more than 50 shareholders and its shares are traded exclusively on the stock exchange or organized over-the-counter market.
Dividend ETFs
There are ETFs (index funds) listed on B3 that replicate indexes composed of companies with a history of dividend distribution. They allow automatic diversification, but the income may have different tax treatment — check each fund’s regulations.
How to Start Receiving Dividends: Step-by-Step
- Open an account with a CVM-registered brokerage. Research the authorized institutions in the CVM registry.
- Define your investor profile. Variable income involves the risk of capital loss. Ensure your financial situation allows you to take this risk.
- Study the available options. Analyze the distribution history, payout (percentage of profit distributed), the company’s financial health, and the sector it operates in.
- Buy the assets before the ex-dividend date. Pay attention to the dividend calendar disclosed by the company or available on B3.
- Wait for the credit in your custody account. The payment period varies according to each company.
- Correctly declare in the Income Tax. Exempt dividends must be reported in the “Exempt and Non-Taxable Income” section. JCP is withheld at source but must also be declared.
Advantages and Risks: A Balanced View
| Aspect | Advantages | Risks and Limitations |
|---|---|---|
| Income | Possibility of recurring cash flow | Not guaranteed; may be reduced or suspended |
| Taxation | Dividends from shares and FIIs are exempt (check current legislation) | Tax rules may change; JCP already has 15% withholding |
| Accessibility | Anyone can invest with small amounts | Requires a brokerage account and minimum knowledge |
| Diversification | FIIs and ETFs allow diversified exposure | ETFs may have different taxation; FIIs have vacancy and default risks |
| Asset Price | Solid companies tend to appreciate in the long term | Price drops on ex-dividend day; there may be permanent devaluation |
It’s important to understand that receiving dividends is not pure profit. When the company distributes R$ 1.00 per share, the share price tends to drop R$ 1.00 on the ex-dividend day. The total value of the investor’s assets does not change immediately — what changes is that part of the value has moved from paper to cash in the account.
Taxation: What You Need to Know
This is a point that deserves special attention, as tax rules can undergo legislative changes. In 2026, always consult the official website of the Federal Revenue (gov.br/receitafederal) to verify the current tax treatment.
What is known based on current legislation:
- Share dividends: exempt from IR for individuals, according to Article 10 of Law No. 9,249/1995. Must be declared in “Exempt Income”.
- Interest on Equity (JCP): taxed at a rate of 15%, withheld at source by the paying company. Must be declared in “Income Subject to Exclusive/Definitive Taxation”.
- Income from FIIs: exempt under the conditions previously described. Capital gain on the sale of shares is taxed at 20%.
- ETFs: follow specific rules — check the prospectus and current legislation.
What to Consider Before Investing for Dividends
Building a dividend-oriented portfolio requires more than looking at the highest Dividend Yield. Some fundamental points:
- Consistency of history: has the company paid dividends regularly in recent years, even during crises?
- Payout ratio: a very high payout may indicate that the company distributes more than would be sustainable in the long term.
- Financial health: check debt, cash generation, and profit margins in the financial statements available at the CVM.
- Sector outlook: regulated sectors tend to have more predictable revenues, but may also face tariff revisions.
- Diversification: concentrating resources in a few assets increases risk. Distributing among different companies, sectors, and asset classes is a recommended practice.
To deepen your knowledge on how to structure a dividend strategy, also check out our article What are dividends and how to start receiving them, which provides additional practical examples.
Conclusion
Dividends are a legitimate and regulated way to participate in the results of companies and funds, and can form part of a long-term wealth-building strategy. However, there are no shortcuts: the investor needs to study, diversify, understand the risks, and maintain realistic expectations.
No dividend is guaranteed. No asset is risk-free. And no past return assures future results. What you can control is the quality of your information and the consistency of your decisions.
Start with the basics: open an account with a CVM-authorized brokerage, study the fundamentals of the companies you are interested in, and build your portfolio gradually and consciously.
This content is for educational purposes only and does not constitute investment advice, financial consultancy, or an indication of any specific asset. Each person has a different financial situation, risk profile, and objectives. For investment decisions, consult a certified professional or investment advisor duly registered with the CVM.
