A dividend is a share of a company's profit paid out to its shareholders, usually in cash — a way you earn from a stock on top of any rise in its price.

Companies with steady profits often distribute part of them as dividends. For investors, they're a source of regular income, and reinvesting them feeds compounding. Not every company pays one — some reinvest all profits to grow faster.

In Pakistan: dividends from PSX stocks are subject to withholding tax.

Example: if you own 100 shares that pay a Rs 5 dividend, you receive Rs 500.

Don't confuse it with: a capital gain — the profit you make when the share price itself rises.

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