Definition:Dividend

Dividend
Category	concepts
Aliases	dividends
Related terms	Share buyback, Payout ratio, Capital management, Underlying earnings
Definition	A distribution of profit to shareholders, declared per share and paid in cash or shares.

💸 Dividend is the portion of profit a company distributes to its shareholders, declared as an amount per share and paid most often in cash, sometimes in additional shares under a scrip alternative. The board proposes the dividend. In many European markets shareholders then approve it at the annual general meeting; US companies typically pay quarterly on board authority alone. Once declared, the dividend is a liability of the company until paid.

📆 Payment runs on a fixed calendar: declaration, ex-dividend date, record date, payment date. On the ex-dividend date the share price drops by roughly the dividend, because buyers from that day on no longer receive it. Policy sits above the calendar: companies anchor the dividend to a payout ratio of earnings and aim to hold or grow the per-share amount. Insurers define that ratio on their preferred earnings measure; AXA, for instance, pays out of underlying earnings. Solvency regulation sets the outer bound: an insurance subsidiary can remit only what its capital position allows, so the group dividend ultimately rests on remittances.

🧲 The dividend is the most binding promise in capital management, because markets treat a cut as a distress signal, so companies hold or raise the per-share amount through all but severe stress. That stickiness, which buybacks lack, is informative. A long record of held-or-raised dividends signals earnings the board trusts; a yield far above peers often prices in the market's doubt that the payment survives. Income investors lean heavily on dividends, and so does the insurance sector's equity story: large insurers rank among the steadiest high payers in most major indices.