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What is a dividend & how does it work?

Definition and Details - Stock Analysis A dividend is a cash payment that a company sends to people who own its stock. Since a stock represents part ownership of a company, a dividend payment is really about the company sending some of its profits to its owners. Most US stocks that pay dividends do so each quarter on a fixed schedule.

Is a dividend a company expense?

When a company pays a dividend, it is not considered an expense on the income statement since it is a payment made to the company’s shareholders. This differentiates it from a payment for a service to a third-party vendor, which would be considered a company expense.

What is a stock dividend?

A stock dividend is a dividend paid as shares of stock instead of cash. You can sell these dividend shares for an immediate payoff, or you can hold them. A stock dividend functions essentially like an automatic dividend reinvestment program (more on that below). When Are Dividends Paid?

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