Dividends are payments a company makes to its shareholders from its profits. They are essentially a reward for investing in the company — a way of sharing the wealth.
Dividends can be paid in cash or additional shares. For example, if a company declares a $1.00 dividend per share and you own 500 shares, you receive $500. Many mature companies like Coca-Cola and Johnson & Johnson have paid dividends consistently for decades.
Not all companies pay dividends. High-growth companies like Amazon often reinvest all profits back into the business instead. The dividend yield (annual dividend / stock price) helps investors compare returns across dividend-paying stocks.