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Dividend

AnalyticsTrade Team
AnalyticsTrade Team Last updated on 26 Apr 2023

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Dividend

A dividend is a payment made by a company to its shareholders out of its profits or reserves. It is the portion of corporate profits paid out to shareholders. When a corporation earns a profit or surplus, the corporation is able to pay a proportion of the profit as a dividend to shareholders. Dividends can be issued as cash payments, as shares of stock, or other property. Most dividends are cash payments.

History of Dividends

The concept of dividends dates back to the Middle Ages, when the first joint-stock companies were formed. These companies were owned by multiple shareholders, and the profits were divided among them. Over time, the practice of paying dividends became more formalized, and today, dividends are a common way for companies to reward their shareholders.

Comparison Table

Type of Dividend Tax Treatment
Cash Dividend Taxable
Stock Dividend Taxable
Property Dividend Taxable

Summary

Dividends are payments made by a company to its shareholders out of its profits or reserves. Dividends can be issued as cash payments, as shares of stock, or other property. Most dividends are taxable, regardless of the type of dividend. For more information about dividends, investors can visit the websites of the Securities and Exchange Commission, the Internal Revenue Service, and other financial websites.

See Also

  • Stock Splits
  • Capital Gains
  • Stock Buybacks
  • Shareholder Rights
  • Dividend Yield
  • Dividend Reinvestment Plans
  • Dividend Tax
  • Dividend Payout Ratio
  • Dividend Growth Rate
  • Dividend Stripping

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