A dividend is a cash payment from a company to its shareholders, typically paid quarterly from after-tax profits. Mature, profitable companies (Coca-Cola, P&G, Johnson & Johnson) tend to pay consistent dividends; growth companies (Tesla, Amazon for years) reinvest profits instead. Dividend yield = annual dividend / share price; the S&P 500's yield averages 1.5-2%. Qualified dividends from US corporations held for 60+ days are taxed at favorable long-term capital gains rates (0%, 15%, 20%); non-qualified dividends (REITs, some foreign companies) are taxed as ordinary income. Reinvesting dividends compounds returns dramatically over decades.
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Dividend
August 22, 2026 · Aditya Gupta
Investing
Related terms
401(k)
A 401(k) is an employer-sponsored retirement plan where employees contribute pre-tax salary that grows tax-deferred until withdrawal. The…
Active Management
Active management is the attempt to outperform a benchmark through stock selection, sector rotation, market timing, or any…
Alpha
Alpha is excess return relative to a benchmark, adjusted for risk (beta). Positive alpha means an investment outperformed…
Asset Allocation
Asset allocation is the percentage split of your portfolio across asset classes — typically stocks, bonds, and cash,…
Backdoor Roth
The Backdoor Roth is a strategy for high earners (above the Roth IRA income limit) to contribute to…
Beta
Beta measures a stock's volatility relative to the overall market (S&P 500 = beta of 1). Stocks with…
