My Definition!: While a share (or stock) in a company represents a fraction of the value of the company itself if you were to sell it, a dividend is a piece of the profits the company makes; given in proportion to the amount of stock you hold. Any dividends you get will stay with you until you gamble them away or spend them on lobster or whatnot. Think of it as a tip a waiter might get for service! (the drawing is based on the stock/pizza analogy (and yes, the yellow thing is supposed to be a pizza))
Extra facts:
- Not all public stock (or "common stock") is going to give out dividends, even if the company does make a profit. In order to get guaranteed dividends you would have to buy "preferred stock", which I can tell you is pretty hard to get ahold of as a small investor.
- Companies will give out dividends in order to make buying their stock seem like a better idea. You can usually assume that means the company has profit to spare, but also wants you to invest in them more and so get more funds.
Now that wasn't so hard, was it?
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