What Is Dividend?
A cash payment a company makes to shareholders, usually quarterly.
The Full Definition
A dividend is a portion of a company's profits distributed directly to shareholders, typically on a quarterly basis. Not all companies pay dividends — many high-growth companies reinvest all earnings back into the business. Companies that do pay dividends are often mature, profitable, and financially stable. Dividends represent real cash returned to investors independent of stock price movement, and when reinvested, they compound powerfully over time.
Real-World Example
If you own 100 shares of a company that pays a $0.50 quarterly dividend, you receive $50 every three months — $200 per year — just for holding the stock. Reinvested back into more shares, that compounds over decades.