A stock is a security form issues by the corporation. It indicates proportionate ownership in the issuing corporation and indicates rights and obligations associated with this ownership. Profit sources associated with stock exchange are dividends and capital gain. A dividend is a sum of money paid to shareholders for their investments into the issuing corporation. The amount of dividend payout depends on the profitability, accumulated profits, and sources of payout of the issuing corporation. The main source of payouts are retained profits. Dividend policy is a policy used to structure the amount and type of dividend payout. A choice on dividend payout is made on annual shareholder meetings using shareholder’s votes. Time and amount of dividend payout must be approved by corporation’s director. Small corporations don’t payout their dividends on constant basis because they reinvest profit into 5 their personal growth. Large corporations with steady cash flow payout their dividends on more constant basis.