Posted by: admin : Category: Dividends are payments made by companies to the owners of the company’s shares. They are a way for companies to permit shareholder to share in any profits the company has made. There are no set rules on how many dividends a company should issue each year or on how large those dividends should be in relation to profits. It is even possible for companies to issue dividends if a loss was made. It is very often the case that dividend payments made by a company do not embody all of the profits the company has made since the last dividend was issued. Usually, some portion of the profits is retained for investment purposes. These are known formally as retained earnings.
It is not required that companies issue dividends at all but, if they do, they often do it according to a regular schedule. Many companies issue dividends twice a year or four times per year. Normally, the dividend issue must be approved by the board of directors, although sometimes the proposal to issue a dividend is put to the vote of shareholders at the company’s annual general meeting.
Dividends are usually issued in the form of cash, although sometimes they may be issued in the form of shares instead.