A payment made to owners of shares from a company’s profits is called a dividend.
Companies may distribute part of their earnings to shareholders, usually as cash, although stock dividends and other forms also exist. The board of directors commonly declares the amount and timetable. A dividend is not guaranteed: a company can reduce, suspend, or omit payments, especially when it needs cash for investment or faces weak profits.
Investors often distinguish a dividend from a capital gain. A dividend is a distribution received while holding the share; a capital gain occurs when an asset is sold for more than its purchase price. A company’s share price can fall even when it pays dividends.
Key dates include the declaration date, ex-dividend date, record date, and payment date. Buying after the ex-dividend date generally means the purchaser does not receive the upcoming declared dividend.