When a corporation earns a profit, it can reinvest it in the business (called retained earnings) or pay it out to shareholders in the form of a dividend. Cash dividends are the most common, and shareholders receive dividends in proportion to their shareholding.
For example, if you own half a share of stock and the company announces a dividend of $4, you’ll receive $2 of cash in your Stockpile account. (Another kind is a stock dividend, where you receive fractional shares of stock in proportion to the shares you own.)
Some companies pay dividends, while others do not. Those that do usually pay dividends quarterly (every three months), but may adopt a different schedule or declare a dividend at any time. Cash dividends are investment income that is usually taxable in the year they are paid.
There is no guarantee that a company that has previously declared dividends will continue to declare dividends in the future or that dividends, if declared, will remain at current levels or increase over time.