What are Dividends?

What are Dividends?

A dividend occurs when a company redistributes its profits. A corporation who earns a profit or surplus can choose to make a payment to its shareholders: this payment is known as a dividend. These payments are generally allocated a fixed amount per share.

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When it comes to life, all sorts of things pay dividends. Education pays dividends—in the form of skills that help you get a good job. Physical fitness pays dividends—in the form of good health and a toned body. And volunteering pays dividends—in the form of helping others out and feeling good about making a difference. Same with investing. Investing in a company often pays dividends—literally.