A payment by a company to its shareholders of record. A dividend is usually paid as cash, though it can be stock. Dividend income is reported to you on Form 1099-DIV. For most people, the tax rate on qualified dividends is 15%, though the rate is 20% for people whose yearly taxable income is in the highest tax bracket. To get the qualified rate of 15%, you must hold a stock for a 61-day period in the 121-day window that begins 60 days before the ex-dividend date (this window changed from 120 days in the original law).

For more details about dividends, see the section Financial Planning: Dividends.