Dividend
A portion of a company's profits paid out to shareholders for owning it.
Some companies share part of their profits with their owners in the form of dividends — usually a few times a year. For a long-term kids' account, reinvesting those dividends to buy more shares is a quiet compounding engine. In a taxable account like a UTMA, dividends count as unearned income.
Explain it to your kid
"Money some companies pay you just for owning a share."
Related words
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