Dividend

Dividends are common dividends paid per share, reported as of the ex-dividend date. In general, profits from business operations can be allocated to retained earnings or paid to shareholders in the form of dividends or stock buybacks.

Stock owners receive dividends in proportion to the number of shares that they own. If a shareholder owns five shares of MSFT, and MSFT pays a one dollar dividend, the shareholder will receive five dollars.

Dividends can be company and growth-specific. Rapidly growing companies (technology) often do not offer dividends; it is expected that the cash will be invested in other business projects that fuel more growth. Steady growth companies (utilities) often offer small and consistent dividends. While some companies have a long and consistent dividend policy (General Electric), others may rarely issue dividends even under consistent positive earnings (Apple).

Dividends can be Qualified or Non-Qualified. Qualified dividends are dividends that meet the criteria to be taxed at the capital gains rate, which is typically lower than the income tax rate. Non-Qualified dividends are dividends that do not meet the requirements to be taxed at the capital gains rate and are taxed as normal income.