What are Dividends Paid by a Company?

Dividends Paid: TL;DR

Dividends paid are the portion of a company's earnings given back to shareholders as a reward for their investment. These payments are typically distributed from the after-tax profits of a company. Not all companies pay dividends, particularly those in growth phases.

Dividends Paid = Dividend per share * Number of shares outstanding

In-Depth Understanding

Going beyond the simple definition, dividends paid are a way for companies to distribute a portion of their net income back to their shareholders. Companies may decide to pay dividends as a way to attract and retain investors, especially when the company has steady profits, and growth opportunities might be limited.

Dividends paid can be in the form of cash payments, additional shares of stock, or other property. The board of directors of the company decides on the amount of dividends to be paid, if any. It's important to note that while dividends can provide a steady income stream for investors, they are not guaranteed and can be reduced or eliminated at any time.

The Dividend Payout Ratio, which is the ratio of dividends paid to net income, is an essential measure that helps investors understand how much of a company’s earnings are being returned to them as dividends.

Real-world Examples

A Technology Company - Apple Inc.

Apple Inc. is known for its regular dividend payments. The company pays dividends out of its net income to its shareholders. The dividend payment is decided by the company's board and is usually a certain dollar amount per share of stock.

A Consumer Goods Company - The Coca-Cola Company

The Coca-Cola Company has a long history of paying dividends to its shareholders. It pays out dividends quarterly, which are funded from its net income. The dividends are paid on a per-share basis and can be received as additional shares or as a cash payment.

An Energy Company - Exxon Mobil Corporation

Exxon Mobil Corporation is a prominent dividend payer in the energy sector. The company's dividends are paid from its net income, and the amount is determined by its board of directors. These dividends can be received as cash or reinvested to purchase additional shares.

Check out financial statements of companies as charts on QuarterChart.com.