Cash Dividends

Dividends are a way for companies to give some of their profits to their shareholders. Startups and fast-growing companies spend most of their earnings (if they have any) on fueling further growth. When a business matures, and there is less opportunity for growth, a company needs a different way to encourage people to own its stock. Dividends are that way.

Companies pay a certain amount per share to shareholders. Usually, the dividends are paid in cash (AKA cash dividends)...the company sends a check to the shareholders based on the number of shares they hold. Another option is to pay a dividend in more stock (AKA stock dividends).