Saturday, December 25, 2010


A dividend is a share of a company's profit that is distributed to shareholders based on their holding in the company. A company will pay a certain portion of its earnings out (called the dividend payout ratio) to shareholders in order to reward them for investing in the company and as a means of improving investor demand for the shares. Over time as the company's earnings grow the dividends paid out are likely also to grow. Dividends may also come in the form of a bonus share issue, or a mandatory share buyback, and other forms of distribution. The dividend yield is calculated as the dividend per share divided by the price per share.

Synonyms: Distribution, Bonus shares, Deemed dividend, Dividend per share
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