Dividends

A dividend is a portion of a company's profit paid directly to shareholders, usually in cash, just for holding the stock — no need to sell. Not all companies pay dividends; some reinvest all of their profits back into growing the business instead.

Dividends usually arrive per share, on a regular schedule (often quarterly), simply for holding the stock.

Shares owned: 50
Dividend: $0.80 per share, per quarter

Quarterly dividend payout: 50 × $0.80 = $40
Annual payout (4 quarters): $160

Whether, and how much, a company pays in dividends is entirely its choice. Mature, steady, profitable companies are more likely to pay dividends, since they don't need every dollar to keep growing. Younger, fast-growing companies more often reinvest all their profits into the business instead, aiming for growth that shows up as a rising stock price rather than a cash payout.

A portion of a company's profit paid directly to shareholders, often on a regular schedule, is called a ____.

Which type of company is generally more likely to pay a regular dividend?

You have to sell your shares to receive a dividend payment.