Investing

Dividend

A dividend is the share of profit a company distributes to its shareholders, usually in cash and on a regular schedule.

Dividends are typically taxed as investment income, often with tax withheld at source depending on the country.

Reinvesting dividends is what turns a portfolio into a compounding machine: a large share of stock markets' historical return comes from that reinvestment.

Related terms

Compound interest — Compound interest is the return generated on both the original principal and the interest already accumulated in prior periods.
IRR — IRR (internal rate of return) is the annual rate that equates the present value of an investment with all its cash inflows and outflows on their actual dates.
Real return — Real return is the nominal return adjusted for inflation: it measures the actual increase in purchasing power.

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Educational content. netclariq does not provide financial, investment, tax or legal advice.