As a shareholder, you're entitled to company profits of any stocks you own. Public companies pay out these profits to shareholders in the form of dividends. If a company makes no profits or chooses to re-invest their earnings to grow the company, they won't pay a dividend. For more on this, check out our guide on dividend payments.

What are franked dividends?

Franking credits, or imputation credits, are a type of tax break for shareholders who receive dividends from companies that have already paid tax on their profits. Company profits are already taxed at the corporate rate of 30%, so to avoid investors paying income tax for a second time on the dividends they receive, franking credits are offered to reduce the tax bills of shareholders by the amount that has already been paid by the company. For more on this, check out our guide on franking credits.