= a payment event

-A dividend is the distribution or sharing of parts of profits to a company's shareholders.

The primary purpose of any business is to create profit for its owners, and the dividend is the most important way that the business fulfils this mission. When a company earns a profit, some of this money is typically reinvested in the business and is called retained earnings, and some of it can be paid to its shareholders as a dividend. Paying dividends reduces the amount of cash available to the business, but the distribution of profit to the owners is, after all, the purpose of the business.

The methods of sharing profits are as follows:

• Cash dividends (most common) are those paid out in the form of "real cash". It is a form of investment interest/income and is taxable in the year it is paid. It is the most common method of sharing corporate profits.

• Stock dividends or Scrip dividends (common) are those paid out in the  form of additional stock shares of the issuing corporation, or other corporation (e.g.: its subsidiary corporation). They are usually issued in proportion to shares owned (e.g.: for every 100 shares of stock owned, a 5% stock dividend will yield 5 extra shares). This is very similar to a stock split in that it increases the total number of shares, while lowering the price of each share, and does not change the market capitalization.

Dividends must be declared (i.e., approved) by a company's Board of Directors each time they are paid. There are four important dates to remember regarding dividends:

• Declaration date: The declaration date is the day that the Board of Director's announce their intention to pay a dividend. On this day, the company creates a liability on its books and it now owes the money to the stockholders. On the declaration date, the Board will also announce a date of record and a payment date.
• Date of record: Shareholders who have properly registered their ownership on or before this date, will receive the dividend. Shareholders who are not registered as of this date will not receive the dividend. Registration in most countries is essentially automatic for shares purchased before the ex-dividend date.
• Ex dividend date: Is set by the exchange where the stock is traded, several days (usually two) before the date of record, so that all trades made on previous dates can be properly settled and so that the shareholder list on the date of record will accurately reflect the current owners. Purchasers buying before the ex-dividend date will receive the dividend. The stock is said to trade cum dividend on these dates. Purchasers buying on the ex-dividend date or after will not receive the dividend. The stock trades ex-dividend on these dates.
• Payment date: The date when the dividend checks will actually be mailed to the shareholders of a company.