Introduction:Dividends represent one of the methods by which companies divide the profits generated by company activity. Dividends are usually a cash payment, which is paid on a quarterly or annual basis. It depends on the company's dividend policy and, currently, there is a lot of discussion about whether it is necessary for organizations to pay dividends or whether it is better not to pay them. Depending on the company's goals and current position in the market, a company can make one or the other decision. This work will address the questions of why companies pay dividends and why it is very important. The company's dividend policy has a great influence not only on the capital structure, but also on the investment attractiveness of a company. It should also be noted that if the dividends are quite high and paid regularly, it is one of the signs that the company has been working successfully and making profits. Therefore, dividends are an essential link in the company's financial policy and represent an important part of the company's management strategy, influencing the processes of investment and use of capital.Literature review:Currently, many organizations pay dividends to their shareholders, which represent the amount of money of the company's profit. The methods and decision on paying dividends depend on the objectives of organizations, therefore each company determines its own dividend policy. First of all, it is necessary to define the notion of dividends. Many researchers define them as payments that a company makes to its shareholders (Brealey, et al., 2008). Damodaran (2001) defines another way to describe dividends as one of the ways that help shareholders return their money. Having considered the definition, the work can...... middle of paper...... attract new investors from the market, to demonstrate good results in the performance of companies, to control unsuitable managers and also dividends can solve the problem of the enormous money supply. Works CitedCohen, Gil and Yagil, Joseph (2009) 'Why do financially distressed companies pay dividends?' Applied Economics Letters, 16, pp. 1201-1204DeAngelo, H., DeAngeloa, L., Stulz, R.M. (2006) “Dividend Policy and the Earned/Contributed Capital Mix: A Test of Life Cycle Theory” Journal of Financial Economics, 81, pp. 227–254Feldstein, Martin and Green, Jerry (1983) “Why do companies pay dividends?”American Economic Review, vol. 73, No. 1, pp. 17-30Lewis, T.W. Cheng, Hung Gay Fung and Leung, T.Y. (2007) "Why do poorly performing companies pay cash dividends in Mainland China?"International Review of Accounting, Banking and Finance, Vol. 1, no. 1, pp.55-75