Dividend

investopedia says:


 * 1) A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (dividends per share). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield. Dividends may be in the form of cash, stock or property. Most secure and stable companies offer dividends to their stockholders. Their share prices might not move much, but the dividend attempts to make up for this. High-growth companies rarely offer dividends because all of their profits are reinvested to help sustain higher-than-average growth. Also referred to as "Dividend Per Share (DPS)."
 * 2) Mandatory distributions of income and realized capital gains made to mutual fund investors. Mutual funds pay out interest and dividend income received from their portfolio holdings as dividends to fund shareholders. In addition, realized capital gains from the portfolio's trading activities are generally paid out ( capital gains distribution) as a year-end dividend.

Stock Dividends
Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend. Many corporations retain a portion of their earnings and pay the remainder as a dividend. In other words, payment of a dividend is based on many factors and can only be decided by the corporation issuing the stock.

The decision to invest in dividend paying stocks versus stocks that do not pay dividends is uncertain at best. There are many reasons to support either position, as well as tax implications for both the issuing corporation and the stockholder.


 * Insight can be found in the forum: What is so great about dividends? Alot of misinformation?