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Glossary
Dividend
Definition
The percentage of a company's stock value paid to shareholders. A stock selling for USD 100 per share with an annual dividend of USD 1 per share yields the investor a 1% dividend.
What is a dividend?
A dividend is a portion of a company's earnings that is distributed to shareholders. Dividends are typically paid regularly (such as quarterly) and can be in the form of cash or additional stock. They are a way for companies to share profits with their investors.
Why are dividends important to consider when trading?
Dividends are a key factor for traders, especially for those seeking regular income from their investments. Stocks that pay dividends can provide a steady income stream, which can be particularly attractive in volatile or bear markets. Dividends also signify a company's financial health and stability, often attracting conservative investors. For long-term investors, reinvesting dividends can significantly enhance the compounding effect on investment returns.