Glossary
Dividend: definition
A dividend is cash, or sometimes stock, paid by a company to its shareholders from earnings or reserves. On the day the share goes ex-dividend, the price normally drops by roughly the cash, before tax effects.
In practice
Dividends are one way owners receive value. Buybacks are another. A high dividend yield can mean a generous policy or a fallen share price. It can also be a warning that the payment is larger than the cash the business can sustain. Withholding tax on foreign dividends depends on the country of the company, the country of the holder and any treaty. Wrappers such as ISAs and retirement accounts change the tax result and are explained in the country guides, not in this definition.
A worked example
A share at 50 paying 1 a year has a 2% trailing yield. If the price falls to 25 and the dividend is maintained, the trailing yield doubles without the company becoming more generous. If the dividend is then cut, both the yield story and the price can change again.
Related
Sources and review
Last reviewed: 2026-10-13. Next review due 2027-04-13. Status: editorial review of this page, not a live verification of every third-party fee.
Author: WiT Markets Editorial, Editorial desk. The WiT Markets editorial desk writes explanatory pages, comparison context and research notes. It separates sourced facts from items that are not confirmed, and it does not provide personal recommendations.
Reviewed by: WiT Markets Research Review.
Primary and regulatory sources
- U.S. Securities and Exchange Commission — checked 2026-10-13
- Investor.gov — checked 2026-10-13