Dividends

Dividends (Definition)

Dividends are a distribution of a portion of a companys earnings to its shareholders.

Key aspects of dividends include:

1. Represent a return on investment for shareholders
2. Can be paid in cash, additional shares, or other property
3. Declared by the companys board of directors
4. Often paid quarterly, but can be annual or on special occasions
5. Reduce a companys retained earnings when distributed
6. Can be an indicator of a companys financial health and shareholder-friendly policies
7. May be preferred by income-focused investors

Understanding dividend policies and their impact is important for both companies managing their capital and investors evaluating potential investments.