Dividend - GCSE Business Definition

A dividend is a portion of a company's profits that is distributed to its shareholders as a reward for their investment in the company. Typically paid in cash or, occasionally, as additional shares, dividends are usually decided by the company's board of directors. They are paid quarterly, semi-annually, or annually. Dividends provide an incentive for investors to purchase and hold a company's shares. They reflect the company's financial health and profit-making ability. Investing in companies that regularly pay dividends can generate a steady income for a shareholder.