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How do dividends work?

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Quick answer

A dividend is a share of a company's profit paid out to its shareholders, usually as cash. If you own stock in a dividend-paying company, you receive regular payments — a way to earn income from investments without selling them.

Step by step

  1. Dividends are profit payments to shareholders.
  2. They're often paid quarterly, as cash per share.
  3. More shares means a larger total payout.
  4. Not all companies pay them — many reinvest profits instead.

People also ask

How do dividends work?
A company shares part of its profit with shareholders, paying a set amount per share you own.
How often are dividends paid?
Commonly every quarter, though some companies pay monthly, annually, or not at all.
Why don't all stocks pay dividends?
Many growth companies reinvest profits to expand instead of paying them out to shareholders.

Part of the guide: Money Basics: Save, Borrow & Invest →