Dividends are the regular financial returns to shareholders who invest in the company.
When a company earns a profit, it can be put to two uses: either re-invested in the business (called retained earnings), or paid to the shareholders of the company as a dividend. Companies generally retain a portion of their profits and pay the remainder as a dividend. Companies listed on the stock exchange usually pay dividends in line with a fixed schedule, however, the directors may declare a dividend at any time, sometimes called a special dividend, to distinguish it from a regular one.
Dividends are usually paid in cash (by cheque or direct into your bank account). They can, however, be in shares in the company, either newly-created shares or existing shares bought in the market.