What is a dividend?

Dividends are payments made by a corporation to its shareholders, usually in the form of cash or additional stock. They represent a portion of the company's earnings that is distributed to investors, typically on a regular basis such as quarterly. Dividends are a way for companies to share profits with their shareholders and are often seen as a sign of financial health. Not all companies pay dividends; those that do are often well-established firms with stable earnings. Receiving dividends can provide investors with a steady income stream.