Glossary · Basics
Dividend
A portion of company profits paid to shareholders.
A dividend is cash (or sometimes extra shares) a company distributes to shareholders, usually from profits. Not every company pays dividends; many growth companies reinvest earnings instead.
Dividend payments are typically scheduled quarterly. Yield is a common way to compare them: annual dividend income divided by the share price. Dividends can be cut if a company’s finances weaken, so they are income — not a guaranteed return.
Example
If you own 50 shares of a stock that pays $0.80 per share each quarter, you receive $40 every dividend payment (before taxes).