A dividend is a portion of a company’s earnings distributed to its shareholders as a reward for their investment in the company’s stock. Dividends are typically paid in cash or as additional shares (stock dividends) and are usually issued by profitable, stable companies. The dividend amount and frequency (often quarterly or annually) are determined by the company’s board of directors and are paid from a company’s net profits. Dividends are attractive to income-focused investors, providing them with a steady income stream in addition to potential capital gains.

An example can be seen when Infosys Limited declared a final dividend of ₹20 per share for the financial year 2022–23. This means that if an investor owns 500 shares of Infosys, they would receive ₹10,000 as dividend income, directly credited to their bank account. Dividends are paid from a company’s profits and serve as a way to share earnings with shareholders. For instance, large and stable companies like Tata Consultancy Services, Hindustan Unilever, and ITC regularly distribute dividends to reward their investors. .

The Dutch East India Company issued shares to the public, allowing investors to buy partial ownership of the company. As the company generated profits from its overseas trade, it paid dividends to its shareholders as a way to share the profits. Dividends from the VOC were paid annually in cash or kind (spices, tea, etc.) and were a significant incentive for shareholders. These dividends helped attract investors by providing a regular income stream in addition to the potential for capital gains.