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A dividend is a payment made by a company to its shareholders, usually from its profits.
In Depth
When a company makes a profit, it can choose to reinvest that money back into the business or distribute a portion of it to its shareholders. These distributions are called dividends. They are typically paid out per share on a regular basis, such as quarterly, and can be in the form of cash or additional stock. Dividends are a way for investors to earn income from their investments without selling their shares.
Example
If you own shares in a company that pays a $0.50 quarterly dividend, you will receive $0.50 for each share you own every three months.