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Dividends

Cash payments some companies share with their stockholders.

A dividend is a portion of a company's profit paid directly to shareholders, usually every quarter. Not all companies pay dividends — many growth-focused companies (like most tech startups) reinvest profits back into the business instead.

Picture it

$50

Jan–Mar

$50

Apr–Jun

$50

Jul–Sep

$50

Oct–Dec

= $200 a year from 100 shares

You own 100 shares of a made-up company that pays 50 cents per share every three months. That's four payments of $50, or $200 a year, for as long as the company keeps paying.

Dividend payments are often described as a "yield" — a percentage of the stock price you receive per year. A stock priced at $100 paying $4/year in dividends has a 4% dividend yield. Dividend stocks are often favored by investors seeking steady income, rather than pure stock-price growth.