What is a dividend and how does it benefit shareholders?

A dividend is a payment made by a corporation to its shareholders, typically in the form of cash or additional shares. Dividends are usually paid from a company’s profits and are distributed periodically (quarterly, semi-annually, or annually). For shareholders, receiving dividends provides a return on their investment without having to sell their shares. Dividends are especially attractive to income-focused investors, such as retirees, who rely on them as a source of steady income. Additionally, companies that regularly pay dividends can signal financial stability and profitability, making their stocks more appealing to certain investors.