Dividend

When a company makes money it does not have to keep all of it. A dividend is the portion handed directly to the people who own the shares, paid as cash into their brokerage account, usually four times a year and usually as a fixed amount per share.

Most companies pay nothing at all, and that is not a defect. A younger business that can put every spare dollar back into growing tends to do that instead. Dividends turn up more often at mature companies whose scope for reinvesting at speed has narrowed.

Dividends are declared, not guaranteed. A board decides on each one and can raise it, cut it, or stop it. Companies with long records of annual increases are proud of them and mention them, which is itself a sign of how much attention shareholders pay.

Investors who favor dividends argue that cash paid out is cash that cannot be misspent, and that a regular payment is a discipline on management. Investors who prefer companies that pay nothing argue that a dollar reinvested well is worth more than a dollar handed back and taxed. Both arguments are about the same dollar.