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Trading and Investment Terms

Cash Dividend

A cash dividend can be defined as cash or funds paid to investors usually as part of the organization's present income or gathered profits.


The board of directors must announce the issuing of all dividends and determine if the dividend installment should continue as before or change.


Long term investors looking to augment their benefits can reinvest their dividends. Most brokers provide an option to reinvest or take the cash dividends.


Cash dividends are a typical way for organizations to return capital to their investors as periodic cash payments; usually, quarterly; however a few securities may pay these rewards on a month to month, annual, or semiannual premise.


While numerous organizations deliver regular dividends, there are unique cash dividends that are given to investors after certain nonrecurring occasions, for example, legal settlements or the loaning of money for huge, one time cash dissemination.


Each organization sets up its dividend policy and intermittently evaluates if a dividend cut or an increase is justified. Cash dividends are given out on a per share basis.


An organization's board of directors declares a cash dividend on a declaration date, which involves paying a specific amount of cash per common share.


Cash dividends are different from stock dividends. Sometimes a company may give out its shares as dividends.