Glossary term

Dividend

Cash paid by a company to shareholders.

A dividend returns part of a company's profit or cash flow to shareholders. A good dividend is supported by durable cash generation; a dangerous dividend is funded by debt or maintained while the business deteriorates.

Example: If a company pays $2 per share each year and the stock price is $50, the dividend yield is 4%.

Where this appears

Company quality step 5: shareholder returns