Dividend
A dividend is the part of a company's profits that are distributed to shareholders.
A dividend is the part of a company's profits that are distributed to shareholders. They are usually given as cash (cash dividend), but can also be given in the forms of stock (stock dividend).
High-growth companies seldom offer dividends, because they are more concerned with reinvesting profits in the business. This is so they can maintain above average growth.
However, as companies mature they will often offer dividends to shareholders to sustain investors' interest by means other than mere capital appreciation.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Dividend payments also send out a message that the company is financially stable and on the right track as dividends are a good sign of the company's financial health.
See Tim Bennett's video tutorial: How to pick income winners: What are dividends?
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Inheritance tax raid sees families rush to take out life insurance to pay death bills
Life insurance sales surged last year as families looked for ways to to pay inheritance tax bills, following the Autumn Budget announcement that more assets could be charged
-
Families paying up to £5k for fake ‘asset protection’ trusts – warning signs to avoid
Fraudulent schemes are being misused, offer no real protection and can trigger unintended legal and tax consequences, lawyers have warned