Why do they pay a dividend? Is it because they have too much cash they don't know what to do with?

Also, why do they sometimes increase their dividend?

Thanks.

Dividends are one way a company returns profits to shareholders. Another way is through stock buy-backs. Often, if a company has "excess" cash - e.g. they have a lot of cash but don't have profitable projects they could invest in (and by profitable I mean the projects would not return at least the same rate as their cost of equity) - they 'distribute' that cash by increasing the dividend and/or buying back stock. Sometimes it's a one-time larger dividend, other times, if profits are expected to continue at that rate (or grow) the dividend is increased on a more permanent basis.

FYI - the company doesn't "deduct" the dividend from the share price, the "market" does. I'd explain the math, but I don't want to get too far into the weeds here.

companies pay (and sometimes increase) dividends so they will attract MORE SHARE BUYERS. Did you know that when a dividend is declared and paid, it is DEDUCTED from the share value, and also you pay TAX on the money you receive. That is why a share trades EX DIVIDEND (lower price) because after that date you as new owner no longer have the right to receive the payment.

Why do they pay a dividend? Is it because they have too much cash they don't know what to do with?

Also, why do they sometimes increase their dividend?

Thanks.