Dividend

A dividend is a payout by a company to its shareholders. This payout is proportional to each shareholders stake in the company. Any money that is not paid out via dividend is reinvested back into the company.

Dividend structures vary by company. Some companies pay a fixed dividend every quarter, whereas others decide each dividend based on company performance. Other companies pay no dividends at all. Smaller and younger companies are less likely to pay dividends. This is because they need this money to help the company grow.

All else equal, a stock price will drop by the amount of the dividend per share when a dividend is assigned. This is because that value getting paid out to shareholders is no longer part of the company.