Define: Dividend

A dividend is a payment made by a corporation to its shareholders, usually in the form of cash or additional shares of stock. It represents a portion of the company’s profits that is distributed to its owners.

The determination of dividends is typically made by the company’s board of directors. They consider various factors such as the company’s financial performance, cash flow, and future growth prospects before deciding on the amount to be distributed.

No, dividends are not guaranteed. The decision to pay dividends rests with the company’s board of directors, and they may choose to suspend or reduce dividends if the company’s financial situation deteriorates or if they believe it is in the best interest of the company.

Yes, dividends are generally taxable as income. The tax treatment of dividends may vary depending on the jurisdiction and the individual’s tax situation. It is advisable to consult with a tax professional for specific guidance.

In most cases, a company cannot pay dividends if it is not profitable. Dividends are typically paid out of a company’s profits. If a company is experiencing losses or has insufficient profits, it may not be able to distribute dividends.

Yes, a company has the discretion to choose whether or not to pay dividends, even if it is profitable. The decision to pay dividends is ultimately made by the company’s board of directors, who consider various factors such as reinvestment opportunities, debt obligations, and future growth prospects.

In general, shareholders do not have an automatic right to sue a company for not paying dividends. The decision to pay dividends rests with the company’s board of directors, and as long as they act within their legal authority, shareholders may not have grounds for a lawsuit.

Yes, dividends can be paid in assets other than cash, such as additional shares of stock or property. This is known as a stock dividend or a property dividend. The value of these assets is typically determined by the company’s board of directors.

While it is possible for a company to borrow money to pay dividends, it is generally not advisable. Paying dividends with borrowed funds can increase the company’s debt burden and may not be sustainable in the long run. It is important for companies to maintain a healthy financial position before considering dividend payments.

Yes, a company can change its dividend policy. The decision to change the dividend policy rests with the company’s board of directors, who may consider various factors such as the company’s financial performance, cash flow, and future growth prospects. Shareholders are typically notified of any changes in the dividend policy.