Definition in Stocks and How Payments Work
What Are Dividends?
Dividends are a percentage of a company’s earnings paid to its shareholders as their share of the profits. Dividends are generally paid quarterly, with the amount decided by the board of directors based on the company’s most recent earnings.
Dividends may be paid in cash or additional shares. When a company announces a dividend, it also announces the payment date on which the dividend will be paid into the shareholders’ accounts.
Key Takeaways
- A dividend is a distribution of a company’s earnings to eligible shareholders.
- Dividend payments and amounts are determined by the company’s board of directors.
- Many companies do not pay dividends and instead retain their earnings to be invested back into the…
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