How do dividends work in stock investing?

Dividends are payments made by a company to its shareholders, typically from profits. When you own dividend-paying stocks, you receive a portion of the company’s earnings, usually on a quarterly basis. The amount is determined by the company's board of directors. Dividends can be paid in cash or additional shares of stock. Investors often view dividends as a sign of financial stability, and many use them as a steady income stream. However, not all companies pay dividends, especially those reinvesting profits for growth. Dividends can also impact a stock's price, as ex-dividend dates affect share value.