When a company earns a profit, it can either reinvest it or return some to shareholders as a dividend. If a company pays a ₹10 dividend per share and you own 100 shares, you receive ₹1,000.
Not all companies pay dividends. Fast-growing firms often reinvest everything to expand, while mature, stable companies tend to pay regular dividends. Mutual funds also offer dividend (now called IDCW) options that pass payouts to investors.
Dividends are taxable in the investor's hands at their slab rate. For long-term investors, whether a company pays dividends or reinvests for growth matters less than its total return — dividends plus price appreciation.