dividend

A dividend is the part of a company’s profit that it pays to its shareholders (people who own shares in the company).

• When you buy a share, you become a small owner of the company. A dividend is one way the company “rewards” owners when it earns profit.
• Dividends are usually paid as cash (money deposited into the shareholder’s account), though sometimes they can be given as extra shares.
• A company does not have to pay dividends every year. If profits are low, or if the company wants to expand, it may keep the profit to buy new machines, open new branches, or improve technology.
• Dividend vs interest: interest is a fixed fee paid on a loan (the lender must be paid back), while a dividend depends on the company’s profit (it can be higher, lower, or even zero).
• Example: if a company announces a dividend of ₹5 per share and someone owns 100 shares, they receive ₹500 as dividend.

Dividends matter because they connect the idea of raising capital through shares to how investors can benefit when a business does well.