What is a dividend?

A dividend is defined as a portion of earnings that a company distributes to its shareholders. This distribution is typically in the form of cash payments or additional shares of stock and represents a way for companies to share their profits with investors. When a company earns a profit, it can choose to reinvest those earnings back into the business for growth or return a portion of them to shareholders as dividends. This practice can make investing in the company's stock attractive to investors seeking income and a share in the company’s profitability.

The other choices describe different financial concepts that are unrelated to the definition of a dividend. For example, a tax on company earnings refers to the taxation of corporate profits, which is a separate accounting and fiscal matter. A fee charged for stock transactions pertains to the costs associated with buying or selling shares, not profits distributed to shareholders. Lastly, total revenue refers to the total amount of money generated by a company from its normal business operations, which does not reflect the specific portion set aside for dividends.