Dividend investing is a strategy where investors buy shares of companies that regularly distribute a portion of their profits as dividends. These dividends provide a steady income stream, making this approach appealing for those seeking passive income. Companies that pay dividends are often well-established and financially stable, which can also indicate their long-term viability. Investors typically reinvest dividends to purchase more shares, a practice known as dividend reinvestment. This can lead to compound growth over time, enhancing overall returns. Many investors use dividend investing as part of a balanced portfolio to achieve financial goals, such as retirement or funding education.