Dividend

A dividend is the distribution of a company's profits to its shareholders and is usually paid annually. With equity ETFs, a distinction is made between distributing and accumulating ETFs: distributing ETFs pay dividends directly into the investor's account, generating passive income. Accumulating ETFs, on the other hand, automatically reinvest dividends into the ETF itself. This increases the compound interest effect and boosts the fund volume. In both cases, the income is taxable.

The dividend yield is a key figure that indicates the annual dividends paid out by a company or ETF in relation to the price of the share or fund unit. It thus shows the return an investor receives in the form of dividends per dollar invested.