Dividend is a part of the profit of a company that is paid to (among others) the shareholders. The primary purpose of an enterprise is to make profit for the owners/shareholders. Dividend is the main way in which this profit is paid. Paying dividends has a negative effect on the amount of cash available to the company. Companies strive for a stable or slightly increasing dividend amount. It is not unusual to still pay dividends from the reserves in the case of loss.
If the dividend is not paid in cash but also in shares, this is called stock dividend.