Dividends are payments made by a corporation to its shareholders, typically as a way to distribute a portion of its profits. When a company earns a profit, it can choose to reinvest that money back into the business or share it with its investors. Dividends are usually paid in cash, but they can also be issued as additional shares of stock. Companies that regularly pay dividends are often seen as financially stable and reliable. The amount and frequency of dividends can vary, and they are usually expressed as a fixed amount per share or as a percentage of the share price, known as the dividend yield.