A dividend is a payment that a company distributes to its shareholders, often from profits or accumulated earnings.
Companies may pay dividends in cash, additional shares, or, less commonly, other property. A board of directors typically declares a dividend and sets important dates, including the record date and payment date. The ex-dividend date determines which buyers are entitled to receive an upcoming dividend under applicable market rules.
Dividends are not guaranteed. A company can reduce, suspend, or eliminate them, and some profitable companies choose not to pay dividends because they reinvest cash in expansion, research, acquisitions, or debt reduction. A dividend therefore should not be treated as free money: when a stock begins trading ex-dividend, its market price may adjust downward by approximately the dividend amount, although other market forces also affect the price.
A bond coupon is interest paid by a bond issuer, not a corporate dividend. Dividend yield compares annual dividends with a share price, but yield alone does not show whether a payment is sustainable.