What is Dividend?

A dividend is a payment made by a corporation to its shareholders, usually derived from the company's current or retained earnings. It represents a share of the profits returned to the owners of the business. The decision to pay a dividend, its amount, and its timing are determined by the company's board of directors and announced to shareholders.

Dividends are typically paid on a per-share basis, so an investor receives an amount proportional to their ownership. Companies are not obligated to pay dividends and may choose to reinvest all profits back into the business for growth. Regular dividend payments are often seen as a sign of a company's financial stability and maturity. Payments are often made quarterly (e.g., in the US) or semi-annually (e.g., in the UK).