A dividend is the distribution of some of the company’s profit to its shareholders. Dividends are not mandatory and it is under the discretion of the board of directors as to whether or not they are paid out, and if so, the amount of dividend to be paid out.
Dividends can be distributed in the form of cash, shares, or other asset.
Startups and high-growth companies rarely offer dividends because all of their profits are reinvested back into the company to sustain its growth. Larger, well-established companies tend to issue regular dividends as they try to maximise their shareholder value.
July 19, 2016 16:10