dividend

/div"i dend'/, n.

1. Math. a number that is to be divided by a divisor.

2. Law. a sum out of an insolvent estate paid to creditors.

3. Finance.

a. a pro-rata share in an amount to be distributed.

b. a sum of money paid to shareholders of a corporation out of earnings.

4. Insurance. (in participating insurance) a distribution to a policyholder of a portion of the premium not needed by the company to pay claims or to meet expenses.

5. a share of anything divided.

6. anything received as a bonus, reward, or in addition to or beyond what is expected: Swimming is fun, and gives you the dividend of better health.

[1470-80; < L dividendum thing to be divided, neut. ger. of dividere to DIVIDE]

Syn. 5. allotment, portion.

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Individual share of earnings distributed among stockholders of a corporation or company in proportion to their holdings.

Usually paid in cash, dividends may also be distributed in the form of additional shares of stock. Preferred stockholders receive a preferential dividend, usually at a fixed rate; common stockholders get a portion of what remains after payment of the dividends on preferred stock.

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▪ finance

      an individual share of earnings distributed among stockholders of a corporation or company in proportion to their holdings and as determined by the class of their holdings. Dividends are usually payable in cash, although sometimes distributions are made in the form of additional shares of stock. In a dividend reinvestment plan (DRIP), dividends are automatically reinvested in additional shares of stock. The preferred stockholders are entitled to a preferential dividend, usually at a fixed rate, and the common stockholders get a portion of what remains after payment of the dividends on preferred stock.

      When a corporation declares a dividend, it indicates that stockholders of record as of a specific date will receive the dividend. If the stock is purchased between the date of record and the date the dividend is to be paid, the buyer does not receive the recently declared dividend, and the stock is said to sell ex dividend, or “without dividend.” When a stock sells ex dividend, its price is usually reduced by the amount of the dividend.

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