Dividend

A dividend is a payment made by a company to its shareholders from its profits. Most dividends are paid in cash on a regular schedule—quarterly in the United States, semi-annually or annually in many other markets. Some companies offer dividend reinvestment plans (DRIPs) that automatically use the dividend to purchase additional shares.

Not all companies pay dividends. Fast-growing companies often reinvest all their profits back into the business rather than distributing them. Mature, established businesses in sectors like utilities, consumer goods, and banking tend to be the most consistent dividend payers.

For long-term investors, dividends can be a significant source of total return. When dividends are reinvested and compounded over many years, they can account for a substantial portion of overall wealth growth.