Glossary

Dividends

Payments made by a corporate entity to its shareholders, usually on a regular basis. Companies tend to approach their profits in two ways- either they reinvest any profits - distributing to their shareholders as dividends; or they retain a portion of their profits as earnings to reinvest into the business, while distributing the rest in the form of dividends. Dividends are classed as a taxable income stream. They are usually paid out on a regular (quarterly, annual etc) basis or on an ad hoc basis or when a company has exceptionally strong earnings or is making a change to its financial structure, for example, known as a special dividend.