Dividend

money · business · investing

What dividends are. When a company makes money, it can decide to share some of that profit with the people who own stock in it (called shareholders). Those payments are called dividends.

Company keeps some profits. A company doesn't have to give away all its profits as dividends. It can keep money to reinvest in the business, like buying new equipment or hiring more workers.

Paid in different ways. Companies usually pay dividends as cash, but sometimes they give shareholders extra shares of stock instead, or even use the money to buy back shares they previously sold.

Where the money comes from. Dividends can come from this year's profits or from extra money the company saved in previous years, but companies can't pay dividends using their own startup money or capital.