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Dividends are a type of payment made by a company to its shareholders, typically in the form of cash or additional shares of stock. Dividend payments are made out of the company’s profits or reserves, and they are typically distributed on a regular basis, such as quarterly or annually.

Investors who own shares of a company’s stock are eligible to receive dividends if the company declares and pays them. The amount of the dividend is typically based on the number of shares that the investor owns, and it is typically paid as a percentage of the stock’s current market value.

Income from dividends can be a significant source of return for investors, particularly for those who are seeking a steady stream of income from their investments. However, dividends are not guaranteed, and the amount and frequency of dividends can vary depending on the company’s financial performance and other factors.

Investors should be aware that dividends are taxed as ordinary income, and the tax rate may depend on the investor’s tax bracket and other factors. It is important for investors to understand the tax implications of dividend income and to plan accordingly.