What are dividends?

A dividend is a payment a company distributes to its shareholders as a way of sharing part of its profits. When you buy a stock, you acquire a small ownership stake in the company — and if it generates earnings, it can reinvest that money or return some of it to investors. Most dividends are paid in cash directly into your brokerage account. It's important to understand that dividends are not guaranteed: companies can reduce, pause, or eliminate payments depending on their financial situation.