Dividend

Dividend refers to a reward, cash or otherwise, that a company gives to its shareholders



Dividend

About it

  • Dividend refers to a reward, cash or otherwise, that a company gives to its shareholders.

  • Dividends can be issued in various forms, such as cash payment, stocks or any other form.
  • A company’s dividend is decided by its board of directors and it requires the shareholders’ approval.
  • However, it is not obligatory for a company to pay dividend.
  • Dividend is usually a part of the profit that the company shares with its shareholders.

Paying of dividend

  • After paying its creditors, a company can use part or whole of the residual profits to reward its shareholders as dividends.
  • However, when firms face cash shortage or when it needs cash for reinvestments, it can also skip paying dividends.
  • When a company announces dividend, it also fixes a record date and all shareholders who are registered as of that date become eligible to get dividend payout in proportion to their shareholding.

Keywords:

  • Dividend