Dividend definition

A dividend is a share of a company's earnings or reserves paid to shareholders. It is one of the two ways a stock returns value, alongside a rise in the share price.

Dividends are usually paid in cash, though some are paid as extra shares. A company's board of directors decides whether to pay, how much, and when.

A dividend adds to your total return on top of any capital gain. Before relying on a stock for income, investors check the dividend yield, payout ratio, payment history, and how stable the business is.

Dividend Example

You own 100 shares of a company that announces a dividend of USD 0.50 per share. You receive:

100 shares √ó USD 0.50 = USD 50

That is USD 50 in dividend income, before any tax or broker adjustments.