Dividend

WorldBrand briefing

AI supplement

Original synthesis to sit alongside the encyclopedia article below. Not part of Wikipedia; verify facts on Wikipedia when precision matters.

A dividend is a profit distribution made by a corporation to its shareholders, typically paid out in cash or additional stock shares. It serves as a way for companies to share their financial success with investors, and also acts as an indicator of a firm's financial health and stability.

Key moments

Pre-17th centuryEarly profit-sharing models emerge in European trading ventures
1602Dutch East India Company (VOC) establishes the first standardized regular dividend payments
19th centuryModern corporate dividend policies formalized alongside global stock market regulation
2003U.S. federal tax reform cuts the top rate on qualified dividends to 15%, boosting investor appeal
2017EU mandates clearer public disclosure of dividend policies for listed companies

Core Significance

Dividends play two key roles: they provide steady passive income for long-term investors, and signal a company's consistent profitability to the broader market. Firms with reliable dividend payouts are often viewed as more mature and less risky than growth-focused companies that reinvest all profits.

Common Types

The most prevalent forms include cash dividends (direct cash payments), stock dividends (additional shares issued to existing shareholders), property dividends (non-cash assets like physical goods), and scrip dividends (promised future cash payments). Special one-time dividends are also used when companies have excess short-term profits.

Global Policy Variations

Tax treatment of dividends varies widely by region: some countries use dividend imputation systems to avoid double taxation, while others levy flat withholding taxes on cross-border dividend payments. Emerging markets often have less standardized dividend rules compared to developed economies like the U.S. or EU.

A dividend is the 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's 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 by bank transfer) 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 treated as the 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.[1]

A dividend is allocated as a fixed amount per share, with shareholders receiving a dividend in proportion to their shareholding. Dividends can provide at least temporarily stable income and raise morale among shareholders, but are not guaranteed to continue. For the joint-stock company, paying dividends is not an expense; rather, it is the division of after-tax profits among shareholders. Retained earnings (profits that have not been distributed as dividends) are shown in the shareholders' equity section on the company's balance sheet – the same as its issued share capital. Public companies

Dividend

WorldBrand briefing

Core Significance

Common Types

Global Policy Variations

History

Forms of payment

Payout ratio

Dividend dates

Dividend frequency

Dividend reinvestment

Law and government policy on dividends

Australia and New Zealand

India

United States and Canada

United Kingdom

Effect on stock price

Criticism and analysis

Other corporate entities

Cooperatives

Trusts

See also

External links

References

Tax implications

Tax implications