Dividends are payments made to shareholders from a company's profits. When you own shares in a company that pays dividends, you receive a portion of the company's earnings, typically on a quarterly basis. For example, if you own 100 shares of a company that pays a $2 dividend per share, you would receive $200 in dividends per year (100 shares x $2). Dividends can provide a steady income stream and can be reinvested to buy more shares of the company, potentially leading to greater future returns.

Dividends are a way for companies to distribute a portion of their earnings to shareholders. They represent a form of income for investors and can be an important factor in total returns from stocks, especially for long-term investors. Reinvesting dividends can lead to exponential growth of your investments over time.