<Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> <P> A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits . When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business (called retained earnings) and pay a proportion of the profit as a dividend to shareholders . Distribution to shareholders may be in cash (usually a deposit into a bank account) or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or share repurchase . </P> <P> A dividend is allocated as a fixed amount per share, with shareholders receiving a dividend in proportion to their shareholding . For the joint - stock company, paying dividends is not an expense; rather, it is the division of after - tax profits among shareholders . Retained earnings (profits that have not been distributed as dividends) are shown in the shareholders' equity section on the company's balance sheet--the same as its issued share capital . Public companies usually pay dividends on a fixed schedule, but may declare a dividend at any time, sometimes called a special dividend to distinguish it from the fixed schedule dividends . Cooperatives, on the other hand, allocate dividends according to members' activity, so their dividends are often considered to be a pre-tax expense . </P> <P> The word "dividend" comes from the Latin word "dividendum" ("thing to be divided"). </P>

The after-tax profits that are distributed to stockholders are called