Dividends are payments made by a corporation to its shareholders, typically derived from profits. They serve as a way for companies to distribute a portion of their earnings back to investors, rewarding them for their investment. Dividends can be issued in cash or additional shares of stock, and they are often seen as a sign of a company's financial health and stability. Investors often look for dividend-paying stocks as a source of income, especially in retirement. The amount and frequency of dividends can vary widely among companies, and some may choose to reinvest dividends through a Dividend Reinvestment Plan (DRIP) to purchase more shares, potentially increasing their investment over time.