Dividend
A dividend is a payment some companies make to shareholders from their profits.
1 min read Learning to Invest
What it means
A dividend is a payment some companies make to shareholders from their profits. It provides a way for investors to receive cash without selling their shares, although companies are never required to pay dividends.
Example
If you own 200 shares and the company pays a 25p dividend per share, you'll receive £50 before any applicable taxes.
Why it matters
Dividends can form an important part of your total investment return.
Many successful companies choose not to pay dividends and instead reinvest profits for growth.
Are dividends guaranteed?
No. Companies can reduce, suspend or cancel dividends at any time.