Dividend Term category: Stocks In 10 words or less: A share in a company's profits that is distributed to investors.
Definition: A dividend is a share of a company's profits that it pays to investors. Not all companies pay dividends; a number of companies decide to retain their earnings and reinvest them into the company.
StockJargon Advice: Many people believe that the majority of investment profits are made from dividends. That's not true. The majority are made through capital gains.
However, steady dividends can provide investors with a good source of income. Also, companies that pay dividends provide a little extra "cushion" during market downturns.