Money word, in plain English ← Back to all terms
Dividend
A share of profits paid out to owners. Companies pay it, and some funds pass it on.
Example. Hold shares paying a ₹5 dividend per share and 100 shares earn you ₹500.
A dividend is money a company chooses to hand its shareholders rather than reinvest. It is never guaranteed, even where a company has paid one for years. In a mutual fund, an equivalent payout option exists, and it matters that the NAV falls by the amount paid out on the payout date. That money came out of your own holding, so a payout is not free money.
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