what is the 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 portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be retained earnings, which can be used for the companys ongoing and future business activities. Dividends can be paid out in the form of cash or stock reinvestment, and they are often distributed quarterly. The dividend yield is the dividend per share expressed as a percentage of a companys share price. It is important to note that not all stocks pay dividends, and companies may still make dividend payments even when they don’t make suitable profits to maintain their established track record of distributions. Dividends are considered an indication of a companys financial well-being, and companies that can increase dividends year after year are sought after. The dividend per share calculation shows the amount of dividends distributed by the company for each share of stock during a certain time period. Financial websites or online brokers will report a company’s dividend yield, which is a measure of the company’s annual dividend divided by the stock price on a certain date.