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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.

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However, as companies mature they will often offer dividends to shareholders to sustain investors' interest by means other than mere capital appreciation.

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?

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