Definition of Dividend
What is a dividend? What is the definition of a dividend? Why do some companies pay out dividends, while other companies do not?
A dividend is some form of a taxable benefit that is paid out to the shareholder of a company.
Dividends usually take the form of:
-cash dividend (the most common)
Many companies pay out their dividends on a regular basis (usually quarterly).
Why would a company pay out a dividend?
A company that pays out a dividend is usually a long-established company that generates profits on a very consistent basis.
Dividends are paid out in order to encourage shareholders to continue holding shares in the company, as well as building sustained, long-term shareholder value.
Dividends are paid out of current or retained earnings.
Companies are not required to pay out dividends - many companies do not.
Companies are also not required to continue paying out dividends if they have done so in the past, but cutting or eliminating a dividend is usually a sign of poor health for a company.
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