Glossary - Dividend
A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a proportion of the profit as a dividend to shareholders. Dividends can be issued in various forms, such as cash payment, shares of stock, or other property. The amount and timing of dividends are decided by the company's board of directors.
Also known as
- Profit distribution
- Dividend payout
Use cases examples
- Company Annual Report: The board of directors has declared a cash dividend of $0.50 per share, payable on July 15 to shareholders of record as of June 30.
- Shareholder Meeting Minutes: Following a review of the company’s financial health and future prospects, a decision was made to increase the annual dividend payout by 10% over the previous year.
Considerations for investors
- Dividend yield and consistency can be indicators of a company's financial health and stability.
- Dividend payments reduce the amount of capital available for reinvestment in the company. It's crucial to assess whether the company balances rewarding shareholders and funding growth.
Considerations for founders
- Understanding the impact of dividend payments on the company’s cash flow and working capital.
- Evaluating the potential message a dividend declaration sends to the market about the company’s health and future prospects.
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