Dividend

What is Dividend? — Definition

A dividend is a cash payment (or occasionally stock) that a company distributes to its shareholders from its profits. Companies that pay dividends are typically mature, profitable businesses with stable cash flows — utilities, consumer staples, financials, and healthcare companies dominate the dividend-paying universe.

Dividends are declared by the board of directors and typically paid quarterly. To receive a dividend, you must own the stock before the ex-dividend date. The payout ratio (dividends / earnings) shows how much of profits are being returned versus reinvested. A ratio above 80–90% may signal stress; below 50% generally suggests the dividend is well-covered.

Example

Johnson & Johnson (JNJ) has increased its dividend for over 60 consecutive years. A $10,000 investment in JNJ in 1970 would have returned tens of thousands in dividend income alone, with the original investment appreciating dramatically.

BMInsider's Dividend Calendar tracks upcoming dividend payment dates, ex-dividend dates, and yield information for hundreds of dividend-paying stocks so you never miss a payout.