Dividends are payments made by a Corporation to its shareholders. Dividends are usually paid in cash. Companies also have the option of paying Dividends in stock. A company is under no obligation to pay a Dividend, and in times of low earnings a Dividend cut may occur or no Dividend may be paid at all.

Stock Dividends are more common with large companies that have little or slow growth rates. Smaller companies which are experiencing rapid growth don't usually pay stock Dividends.

When a company pays a Dividend the price of it's stock is usually reduced by the total amount paid in Dividends.