Investing terms can often feel confusing, especially for beginners. This glossary is designed to give you clear, simple definitions of the most important concepts in fundamental investing so you can understand how markets work and make better financial decisions.
Fundamental investing focuses on analyzing businesses based on their financial performance, competitive advantage, and long-term value. To do that effectively, you need to understand the language investors use—from basic terms like assets and cash flow to more advanced concepts like return on invested capital (ROIC) and discounted cash flow (DCF).
In this investing glossary, each term is explained in plain language with a focus on real-world understanding—not technical jargon. Whenever possible, definitions are connected to broader investing concepts so you can see how each idea fits into the bigger picture.
You’ll learn key terms related to:
Financial statements and accounting concepts
Business analysis and valuation methods
Stock market fundamentals and investment strategies
Risk, return, and long-term decision-making
If you’re just getting started, this glossary is the perfect place to build your foundation. If you’re already learning, it will help reinforce and clarify the concepts that matter most.
Start with our complete guide: What Is Fundamental Investing
Then explore deeper topics in Investing Basics and Business Analysis
A stock buyback is when a company uses cash or other financing to purchase its own outstanding shares, potentially reducing the number of shares owned by outside investors. A stock buyback is also called a share repurchase. Companies may buy back stock to: For fundamental investors, the key question is not whether a company is
A share repurchase is when a company buys back its own outstanding shares from investors, reducing the number of shares in circulation. Share repurchases are also commonly called: Companies may use excess cash to repurchase shares as an alternative to: For fundamental investors, the key question is not simply whether a company is buying back
The payment date is the date a company, fund, or other issuer distributes a declared dividend or other scheduled payment to eligible investors. For a cash dividend, the payment date is when the dividend is actually sent to shareholders who qualified for the distribution. A typical dividend timeline includes: For dividend investors, the payment date
The record date is the date a company uses to determine which shareholders are officially entitled to receive a declared dividend or participate in certain corporate actions. For dividends, the company reviews its shareholder records as of the record date to identify eligible holders. The record date is commonly announced together with: For investors, the
A Dividend Aristocrat is a company with a long record of consistently increasing its dividend, most commonly associated with members of the S&P 500 that have raised their regular cash dividend for at least 25 consecutive years. Dividend Aristocrats are often followed by income and fundamental investors because long dividend-growth streaks can indicate: However, a
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The ex-dividend date is the date when a stock begins trading without the right to receive its next declared dividend. Investors who purchase shares on or after the ex-dividend date generally do not receive the upcoming dividend. Instead, the dividend is typically paid to the shareholder who was entitled to it before the stock went
Dividend growth is the increase in the amount of cash dividends a company pays to shareholders over time. Investors often track dividend growth because a rising dividend can indicate: Dividend growth is different from dividend yield. Dividend yield measures current income relative to share price, while dividend growth measures how quickly the dividend itself is
The dividend payout ratio measures the percentage of a company’s earnings that is distributed to shareholders as dividends. It helps investors understand how much profit a company returns to shareholders versus how much it retains for: A common formula is: At the per-share level: The result is usually expressed as a percentage. Why the Dividend
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Dividend yield is a financial ratio that measures the annual cash dividends paid by a stock relative to its current share price. A common formula is: The result is usually expressed as a percentage. For example, if a stock pays $2.00 per share in annual dividends and trades at $50: A 4% dividend yield means
The Fixed Charge Coverage Ratio (FCCR) measures a company’s ability to cover recurring fixed financial obligations using operating earnings. It is commonly used to evaluate whether a business generates enough earnings to meet obligations such as: A simplified formula is: The exact formula can vary depending on which fixed charges are included. A higher FCCR
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