Dividend
A cash payment a company makes to its shareholders out of profits, paid on a schedule the board sets and can change, rather than owed on fixed dates the way a bond coupon is owed.
A dividend is cash a company hands back instead of reinvesting. The board sets the amount and can raise it, cut it or skip it, which is the difference between a dividend and a bond coupon: skipping a coupon is a default, skipping a dividend is a decision. Settled, profitable businesses tend to pay them, and fast-growing ones tend to keep the cash for growth. How often the cash arrives follows local habit rather than any rule: quarterly is the norm in the United States and Canada, while payers in the United Kingdom, much of Europe and Japan more often settle once or twice a year.
Two ratios describe the payment. Dividend yield is the yearly dividend divided by the share price, so a yield can rise for the unwelcome reason that the price fell. Payout ratio is the dividend divided by earnings, and a figure above 100 percent means a company is paying out more than it earns, which cannot run for long. Total return counts dividends alongside the price change, and reinvesting them is what turns a stream of payments into compound interest.
What people get wrong is treating a dividend as free money. On the ex-dividend date the share price typically falls by roughly the amount being paid, because that cash has left the company. Value moved from the share price into your account rather than appearing from nowhere. In the United States, dividends paid into a taxable account are taxable in the year they are received, including when they are reinvested automatically, and each reinvestment raises the cost basis behind a later capital gain.