A dividend stock is a share in a publicly-traded company that distributes company profits to its shareholders on a regular basis. Usually paid quarterly, these profits are distributed in the form of cash payments known as dividends and can vary greatly between companies. The dividend itself is often referred to as the dividend yield which represents the ratio of a company’s annual dividend compared to its current share price and is represented as a percentage. Commonly, high-paying dividend stocks are offered by well-established, profitable companies in order to reward investors and keep them invested in the company. The dividend is also an excellent incentive for investors as they know they will receive a recurring income regardless of what is happening with the stock’s share price.