What is Dividend? A Simple Explanation for Kids, Teens and Beginners

What is Dividend? Stock Market 101: Easy Peasy Finance for Kids and Beginners

Introduction to Dividend for Kids and Teens

This video explains the concept of dividend in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about dividend, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

What is Dividend - A Simple Explanation for Kids Teens and Beginners
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Suitable for students from grade levels:

  • Kindergarten
  • Elementary School
  • Middle School
  • High School

The topics covered are:

Howdy Wall Street Willy. We talked about EPS, or Earnings Per Share, a little while back. And then you told me about Dividends.

But what is a dividend anyway?

What is Dividend for Kids Teens and Beginners - A Simple Definition
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Dividend is the portion of a company’s profit that is distributed to stockholders. That’s what you receive if you own stock in the company.

Well, can you give me an example of a dividend?

Sure, if you own 5 stocks in the company, and the dividend is 30 cents per share, then you would receive 5 times 30 cents, or $1.50 as the dividend.

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So, the higher the dividend, the better it is?

Generally speaking, yes, because it means the company is making a good profit.

But at times, a company can also pay a dividend if it is not making a profit, or if it is making less profit than is shown by the dividend.

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They can pay this extra dividend from the money saved up from previous years – called reserve.

Well, why is dividend even important?

You can earn from stocks in 2 ways:

  1. By selling the stock at a higher price than you bought it for, and
  2. From dividends
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So, since dividend is one way to make money from stocks, it is important.

So a company that is doing well and pays out dividends consistently can be a good investment if you’re looking for a steady income instead of the stock price increasing.

Thank you very much for telling me about a dividend Wall Street Willy

You’re welcome, Sooper Cooper. Remember, finance is your friend!

Video Featured in the Below Financial Literacy Course for Kids & Teens

Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens

Podcast: What is Dividend?

Dividend from Stocks
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