Dividend
From The Art and Popular Culture Encyclopedia
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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 portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-invested in the business (called retained earnings). The current year profit as well as the retained earnings of previous years are available for distribution; a corporation is usually prohibited from paying a dividend out of its capital. Distribution to shareholders may be in cash (usually a deposit into a bank account) or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or by share repurchase. In some cases, the distribution may be of assets.
The dividend received by a shareholder is income of the shareholder and may be subject to income tax (see dividend tax). The tax treatment of this income varies considerably between jurisdictions. The corporation does not receive a tax deduction for the dividends it pays.
See also
- Citizen's dividend
- Common stock dividend
- CSS dividend policy
- Direct debit dividend contributions
- Dividend units
- Dividend yield
- Employee stock ownership
- Liquidating dividend
- List of companies paying scrip dividends
- Qualified dividend
- Social dividend
