GLOSSARY TERM
Dividend
A dividend is a payment that a company makes to its shareholders, usually from its profits.
What does this mean in practice?
If you own shares in a company that pays dividends, you may receive part of the company's profits as cash. Some companies pay dividends regularly, for example every quarter or once a year, while others do not pay them at all. Instead of paying profits out, a company may also keep the money and use it to grow the business.
Example
If you own shares in a company and it pays a dividend of €1 per share, you receive €10 if you own 10 shares. With funds or ETFs, dividends may either be paid out to you or reinvested inside the fund, depending on the type.
Why it matters
Dividends are one part of total return. They can provide income, but for long-term growth, what matters most is not just receiving dividends, but how that money is used or reinvested over time.
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