What is Dividend?

A **dividend** is a payment made by a company to its shareholders, typically in the form of cash or additional shares, as a distribution of a portion of the company's profits. Dividends are usually paid on a regular basis, such as quarterly, semi-annually, or annually. The amount of the dividend is decided by the company’s board of directors and is often based on the company’s profitability. Not all companies pay dividends; some reinvest their profits back into the business for growth and expansion. Dividends are a way for investors to earn a steady income from their investments in addition to potential capital gains (the increase in the stock's value). Companies that consistently pay dividends are often viewed as stable and financially healthy, and dividend-paying stocks are popular among income-focused investors, like retirees.