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Cash Dividend

A cash dividend is a payment made by a corporation to its shareholders, distributed from the company’s profits or retained earnings. Dividends are typically paid on a regular basis (quarterly, semi-annually, or annually) and provide shareholders with a return on their investment. Cash dividends are usually expressed as a per-share amount, meaning each shareholder receives a set amount of cash for each share they own.

Example

A company declares a cash dividend of $2 per share. A shareholder who owns 100 shares will receive $200 in cash dividends.

Key points

• Cash dividends are payments made to shareholders from a company’s profits or retained earnings.

• Dividends are usually paid regularly, providing income to shareholders.

• Companies paying dividends are often financially stable with consistent cash flow.

Quick Answers to Curious Questions

Cash dividends provide shareholders with a portion of the company’s profits, offering a return on their investment.

Cash dividends are typically expressed as a per-share amount, meaning each shareholder receives a set amount of cash for every share they own.

No, not all companies pay cash dividends. Many growth companies reinvest profits into expansion rather than distributing them to shareholders.

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