Dividends are payouts that a company distributes to its shareholders as a share of its profits or retained earnings. Dividends can be issued in cash or additional shares of the company. Companies decide the amount and frequency of dividends based on their financial health, policies, and goals. For instance, a company might announce a $1 dividend per share quarterly, so if a shareholder owns 100 shares, they will receive $100 in dividends for that quarter. Dividend payouts are a way for companies to return value to investors, particularly in established firms with stable earnings. Note that not all companies issue dividends; many opt to reinvest profits into growing the business. These distributions are typically declared by the company's board of directors and require approval from the shareholders usually during annual general meetings. The ability to consistently payout dividends can indicate financial stability. Companies that don't issue dividends may instead aim to offer growth in share value to their investors.