1. Money
You can opt-out at any time. Please refer to our privacy policy for contact information.

What is a Dividend


Question: What is a Dividend
Answer: Some stocks, especially blue chips, pay dividends. This means that for every share you own, you are paid a portion of the company's earnings. For example, for every share of AT&T you own, you will get sent $0.15 every year. Most companies pay dividends quarterly (four times a year), meaning at the end of every business quarter, the company will send a check for 1/4 of $0.15 for each share you own.

This may not seem like a lot, but when you have built your portfolio up to thousands of shares, and use those dividends to buy more stock in the company, you can make a lot of money over the years.

For more information, read our Dividend and Dividend Investing Guide. You may also want to read 101 Things Every Investor Should Know About Stocks: A 3 Minute Guide to Understanding the Stock Market.

©2014 About.com. All rights reserved.