A dividend is the distribution of a token reward from a portion of company’s earnings, and is paid to a specified class of shareholders.

Dividends are determined by a company’s board of directors, and approved by shareholders through voting rights.

Dividends are most frequently issued as a cash payment. Larger, more well established companies with consistent profits are typically the best dividend payers. These types of companies seek to maximize shareholder wealth in addition to normal growth by issuing regular dividends (typically quarterly or annually.)

Individual companies, along with some mutual funds and exchange traded funds (ETF) also pay dividends.