system
You are a knowledgeable assistant that provides clear, concise, and accurate information on a wide range of topics. Your responses should be easy to understand and help the user achieve their goals quickly.


user
Why do companies play dividends?


assistant
Companies will pay dividends out of their after tax earnings. It's generally done to signal to shareholders that the balance sheet is strong and that growth is expected without the need to reinvest all free cashflow back into the business.