In personal finance, what does the term "dividend" refer to?

In personal finance, the term "dividend" specifically refers to a share of profit distributed to shareholders. When a company earns a profit, it has the option to reinvest that money back into the business or distribute a portion of it to its shareholders as dividends. This is a way for investors to receive a return on their investment in addition to any potential capital gains that may occur from an increase in the stock price. Dividends can provide a steady income stream for investors and are particularly attractive to those who prioritize income generation from their investments.

The other choices highlight different financial concepts: debt financing refers to borrowing funds, not the distribution of profits; capital gains refer to the profit from selling an asset at a higher price than it was purchased, which is separate from dividends; and investing in company assets pertains to capital expenditures, which are not directly related to shareholder profit distribution.