---
title: What Are Dividends and How Do They Work?
description: "Dividends are **profit distributions** made by a company to its shareholders. Paid quarterly or annually, they are often declared as a percentage of a share’s face value. ***Example: ₹5/share dividend on 100 shares = ₹500***Dividends are taxed as per your…"
url: "https://arafinserv.com/fa/beginners-guide-to-stocks/what-are-dividends-and-how-do-they-work/"
updated: "2025-11-20"
category: Beginner’s Guide to Stocks
---

# What Are Dividends and How Do They Work?

Dividends are **profit distributions** made by a company to its shareholders. Paid quarterly or annually, they are often declared as a percentage of a share’s face value.

***Example: ₹5/share dividend on 100 shares = ₹500***Dividends are taxed as per your income tax slab and depend on the company’s profitability and board decision.