Finance
What is A dividend?
A dividend is a share of a company's profits paid out to its shareholders, usually as cash. It is one of the two main ways owning a stock can reward you — the other being the share price rising.
See it, don’t just read it.
Watch a 2-minute lesson with voice + animation that explains a dividend.
Key things to understand
- 1Companies can return part of their profits to shareholders as dividends.
- 2They're often paid quarterly, as a set amount per share owned.
- 3Not all companies pay them — many growing firms reinvest profits instead.
- 4The 'dividend yield' is the annual dividend as a percentage of the share price.
- 5Dividends plus any rise in share price make up a stock's total return.
Frequently asked questions
- Why don't all companies pay dividends?
- Many fast-growing companies reinvest their profits to expand instead, betting that a higher share price will reward shareholders more than cash payouts would.
- What is dividend yield?
- The yearly dividend divided by the share price, shown as a percentage — a quick way to compare the income different dividend stocks pay relative to their price.
- How are dividends taxed?
- It depends on your country and account type; dividends are often taxable income. Check local rules — this is general information, not tax advice.