Investing term
What is Dividend?
A cash payment a company makes to shareholders — usually quarterly — out of its profits.
A dividend is a slice of a company's profit paid out to shareholders, usually in cash and usually every quarter. If you own 100 shares and the company pays a $0.50 dividend, $50 lands in your account — money you can spend or reinvest to buy more shares.
Not every company pays one. Mature, steady businesses tend to pay regular dividends, while fast-growing companies often pay nothing and plow profits back into growth instead. A dividend is never guaranteed — a company's board decides each one, and they can cut or cancel it in a tough year.
Yield is the annual dividend as a percentage of the share price — here $1.60 on a $40 stock, a 4% cash return.
For example
A stock trading at $40 that pays $1.60 in dividends per year has a "dividend yield" of 4% ($1.60 ÷ $40) — your cash return before the share price even moves.
Learn it by doing
That's Dividend in theory — it clicks when you use it. Practise it hands-on in a free, interactive lesson (Stage 4, Stocks, Bonds, Cash & Alternatives).
Try the free lesson →Why it matters to you
Dividends are the most direct way a company hands cash back to you, and reinvesting them is one of the quiet engines of long-run returns — historically a large share of the stock market's total return has come from dividends reinvested, not price gains alone. A steady, growing dividend is also a signal: a board only commits to one when it's confident the cash will keep coming.
⚠ A high yield can be a warning, not a gift
Yield rises when the price falls, so an unusually high dividend yield often means the market is bracing for a cut. A 9% yield on a struggling company can disappear the day the board slashes the payout — leaving you with a falling price and no income. Chase the business, not the yield.