For companies that make a profit and have shareholders, they have a choice: either they distribute the profit money amongst their shareholders as profit or reinvest the money in the company. If they choose the former, the company’s profits is said to be paid out as dividends. This would be cue for shareholders to leap in the air, how high, depends on the amount paid of course!
For example…
Usually, companies pay out their dividends quarterly, so if a network hardware manufacturer announces they are going to pay a dividend of 30 cents in the first quarter, every quarter, the entire year’s dividend from that company would be $1.20. So, if you had 100 shares in that company, your net dividend for the year would $120.
