# Dividend

> A distribution of a company's profits or cash to shareholders, usually paid in cash on a regular schedule after being declared by the board.

Source: https://www.quantisnow.com/glossary/dividend
Topic: Glossary / Dividends
Also known as: cash dividend, quarterly dividend, dividend payment
Last updated: 2026-10-27

A dividend is a payment a company makes to its shareholders out of its earnings or accumulated cash, declared by the board of directors and paid per share. Most US dividend payers distribute cash quarterly, though some pay monthly, semiannually or annually.

## How it works

Every dividend moves through four dates:

1. **Declaration date:** the board announces the amount and schedule.
2. **[Ex-dividend date](https://www.quantisnow.com/glossary/ex-dividend-date):** the first day the stock trades without the right to the upcoming dividend. You must own the shares before this date.
3. **Record date:** the date the company checks its records to see who gets paid. Under T+1 settlement it is normally the same day as the ex-date.
4. **Payment date:** when the cash arrives.

Forms of distribution:

- **Regular cash dividends:** recurring, often set at a level management expects to sustain.
- **Special dividends:** one-time payments, often after an asset sale or a strong year.
- **Stock dividends:** additional shares instead of cash.

Dividends are not guaranteed. The board can raise, cut or suspend them. Tax treatment depends on whether the dividend is "qualified" (taxed at long-term capital gains rates in the US if holding period rules are met) or ordinary.

## Why it matters for traders

Dividend announcements are watched as signals of management's confidence. A raise suggests the board expects cash flow to support a higher payout; a [dividend cut](https://www.quantisnow.com/glossary/dividend-cut) or suspension often hits the stock hard. On the ex-dividend date, the share price typically falls by roughly the dividend amount, all else equal, since new buyers no longer receive it. Income investors focus on [dividend yield](https://www.quantisnow.com/glossary/dividend-yield) and the [payout ratio](https://www.quantisnow.com/glossary/payout-ratio) to judge sustainability.

## Example

Pinecrest Foods (ticker PCFD) declares a quarterly dividend of $0.45 per share. An investor holding 1,000 shares before the ex-date receives $450 on the payment date. At a $36 share price, the annualized $1.80 dividend equals a 5% yield.

## FAQ

### How do I qualify for a dividend?

Buy the shares before the ex-dividend date. Buying on or after the ex-date means the seller receives the dividend.

### Are dividends guaranteed?

No. The board decides each dividend and can raise, cut or eliminate it.

## Related terms

- [Ex-dividend date](https://www.quantisnow.com/glossary/ex-dividend-date.md): The first trading day on which a stock trades without the right to its next dividend; buyers on or after this date do not receive it.
- [Dividend yield](https://www.quantisnow.com/glossary/dividend-yield.md): A stock's annual dividend per share divided by its current share price, expressed as a percentage of the price.
- [Payout ratio](https://www.quantisnow.com/glossary/payout-ratio.md): The share of a company's earnings paid out as dividends, calculated as dividends per share divided by earnings per share.
- [Special dividend](https://www.quantisnow.com/glossary/special-dividend.md): A one-time dividend paid outside a company's regular schedule, often after an asset sale, a windfall or a buildup of excess cash.
- [Dividend cut](https://www.quantisnow.com/glossary/dividend-cut.md): A reduction or suspension of a company's regular dividend by its board, usually to preserve cash when earnings or cash flow weaken.
- [Dividend reinvestment plan (DRIP)](https://www.quantisnow.com/glossary/drip.md): A program that automatically uses an investor's cash dividends to buy more shares of the same stock, often including fractional shares.

## On Quantisnow

- [Dividend dates explained](https://www.quantisnow.com/guides/dividend-dates-explained)
- [Dividend tracker](https://www.quantisnow.com/dividends)
- [Dividend announcements](https://www.quantisnow.com/categories/dividends)
- [Latest dividend increases](https://www.quantisnow.com/top/dividend-increases)
- [CAGR calculator](https://www.quantisnow.com/tools/cagr-calculator)
- [Compound growth calculator](https://www.quantisnow.com/tools/compound-interest-calculator)
- [Dollar-cost averaging calculator](https://www.quantisnow.com/tools/dca-calculator)
- [Dividend yield and DRIP calculator](https://www.quantisnow.com/tools/dividend-calculator)