A dividend is a portion of a company’s earnings that is paid to shareholders, or individuals that own that company’s stock, typically on a regular basis. This payment is usually given in cash, but can also be distributed as additional shares of stock. Dividends serve as a way of returning capital back to its investors, providing them with a steady income stream. 

The decision to distribute dividends is made by a company’s board of directors and it is usually a share of the profits, so a company which is not making enough money or needs to reinvest its profits into its business may not offer dividends. Therefore, high dividend distributions can be a sign of a company’s overall financial health.

Dividends are a significant source of income for many investors, especially those who are retired and rely on income from their investment portfolios. However, not all companies pay dividends, especially those in growth industries where most profits are reinvested back into the business.

The amount a shareholder receives as a dividend is proportionate to the amount of shares they own. So, for example, if a company pays a dividend of ₹1 per share and you own 100 shares, you would receive ₹100.

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