When you buy stock in a corporation, you own part of that company. This gives you a vote at annual shareholder meetings, and a right to a share of future profits.

When a company pays out profits to the shareholder, the money received is called a "dividend". The corporation's board of directors chooses when to declare a dividend and how much to pay. Most older and larger companies pay a regular dividend, most newer and smaller companies do not. Newer companies prefer to use profits for research and development, expansion into new markets, and “growing” the business.

Get more stock investing guide online if you want to invest in the stock market.