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A payment a company makes from its profits to shareholders at a rate of a certain amount of money per share. For example, a company may decide to pay 5c per share as a dividend. If you hold 1000 shares you will be paid $50. Some companies have a scheme for dividend reinvestment. If you sign up to this your dividend is not paid in cash but reinvested in shares and your holding of shares increases. For example, the company might set a rate of $5 per share and add 10 shares to your holding rather than pay you cash. This enables you to increase your holding without brokerage costs.

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