Dividend explained to kids

A dividend is a payment made by a company to its shareholders, usually as a distribution of profits. When a company earns a profit, it can either reinvest that money in the business or pay it out to shareholders in the form of dividends. Dividends are typically paid out quarterly, though some companies choose to pay them more or less often. There are two main types of dividends: cash dividends and stock dividends. Cash dividends are paid out in cash, while stock dividends are paid out in shares of stock. Dividends can be either regular or special. Regular dividends are paid out on a regular basis, while special dividends are paid out sporadically. Dividends are paid out of a company's profits, so they are only paid when the company is doing well. When a company is not doing well, it may not pay dividends or may even reduce the amount of dividends it pays. Dividends are not guaranteed, and they can be increased, decreased, or eliminated at any time. Dividends are an important source of income for many people, especially retirees. Dividends can also be used to reinvest in a company, which can help to grow your investment.