Dividend

18 May, 2012

How shareholders receive cash in return for their investment.

A dividend is the way shareholders in a company receive a cash return from holding their investment. It is paid from after-tax profits and a company must have sufficient profits (or reserves from previously earned but not distributed profits) to pay for this distribution. Valuations of equity are often based on discounted cash flows of future dividends or on multiples of the current dividend.

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