A dividend is when a company distributes a portion of its earnings to shareholders. Depending on the agreement, dividends can be paid out in cash or more stock for each shareholder.
Example: Let’s say you own 100 shares of stock for a particular company. At the end of each quarter, the company will calculate how much it earned to figure out how much of a dividend they’ll pay out. If they decide that they’ll pay $0.50 per share and you have 100 of them, you’ll earn $50 (100 x 0.50).

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