Q&A: What is a dividend?

A dividend is the distribution of a portion of the company’s earnings, decided and managed by the company‚Äôs board of directors, and paid to a class of its shareholders. Common shareholders of dividend-paying companies are typically eligible as long as they own the stock by the ex-dividend date. Dividends may be paid out as cash or in the form of additional stock.

There is a very common misconception about dividends that I wrote about here.

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