---
title: What is a dividend
description: Learn what a dividend is and how companies distribute profits to shareholders. Understand the impact on share prices and its importance for investors.
---

[Yelza FAQ ](https://yelza.com/faq)

# [What is a dividend](https://yelza.com/faq/what-is-a-dividend)

 Written by [Yelza blogger](https://yelza.com/faq/author/yelza-blogger) | Feb 23, 2026 11:40:14 AM

A **dividend** is a distribution of profit that a company pays to its shareholders. When a company generates profit, it may decide to distribute part of it instead of reinvesting all earnings back into the business. As a shareholder, you then receive an amount per share that you own. 

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Not every company pays dividends. Some choose to reinvest all profits to support further growth.

 

Companies that pay dividends often do so annually or quarterly. The amount is usually determined per share, for example €2 per share. The more shares you own, the higher the total amount you receive.

 

Dividends can be attractive for investors who want to receive regular income from their investments. It is important to understand that a dividend is not additional money created out of nothing. On the payment date, the share price usually decreases by approximately the amount of the dividend distributed.

 

 

 

 

Short example:

 

Companies that pay dividends often do so annually or quarterly. The amount of the dividend is usually determined per share, for example €2 per share. The more shares you own, the higher the total amount you receive. Dividends can be attractive for investors who wish to receive regular income from their investments. It is important to understand that a dividend is not additional money created out of nothing: at the moment of payment, the share price usually decreases by approximately the amount distributed.

 

**Disclaimer: Investing brings **risks. Our analysts are not financial advisors. Always consult an advisor when making financial decisions. The information and tips provided on this website are based on our analysts' own insights and experiences. Therefore, they are for educational purposes only.* *

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