Dividends
Distributions of corporate profits to shareholders, typically in cash or additional shares, representing a return on investment to equity owners.
Dividends
Distributions of a company’s earnings to its shareholders, typically paid in cash or additional shares of stock, representing a return on investment to equity owners.
For instance, a profitable utility company might declare a quarterly cash dividend of $0.75 per share, distributing $75 million to shareholders if 100 million shares are outstanding, while retaining the remaining profits for reinvestment.
Dividend decisions reflect a company’s financial position, growth opportunities, and shareholder expectations. The board of directors declares dividends, establishing record and payment dates. While dividends provide income to shareholders, they reduce retained earnings and cash available for business operations and growth initiatives.