Dividend refers to a portion of profits distributed by a company to its shareholders as a way to reward them for owning shares. It represents a return on investment proportional to the number of shares owned.
Related terms
Stocks (or shares): Ownership units representing a claim on part of an individual company's assets and earnings.
Earnings per share (EPS): A company's net income divided by the number of outstanding shares, indicating the profitability attributed to each share. It affects dividend payouts.
Retained earnings: Profits that a company decides to keep and reinvest in its operations instead of distributing them as dividends.