ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What Is a Dividend? A dividend is the distribution of a company’s earnings to its shareholders and is determined by the company’s board of directors. Dividends are often distributed quarterly and may be paid out as cash or in the form of reinvestment in additional stock.

Detailed explanation-2: -The key difference between dividends and earnings is that dividends are a payment that companies make to shareholders, while earnings are the profits that a company generates.

Detailed explanation-3: -Also known as a scrip dividend, a stock dividend may be paid out when a company wants to reward its investors but either doesn’t have the spare cash or prefers to preserve it for other uses. The stock dividend has the advantage of rewarding shareholders without reducing the company’s cash balance.

Detailed explanation-4: -Dividends are money in hand while the stocks rise and fall in the market. Companies with a record of making regular dividend payments, year after year, tend to be managed more efficiently, as the company is aware that they need to provide their investors with cash four times per year.

Detailed explanation-5: -A dividend is a reward given to shareholders who have invested in a company’s equity, usually originating from the company’s net profits. Companies keep most profits as retained earnings, representing money to be used for ongoing and future business activities.