dividend

Vocabulary Word

Definition

'Dividend' is a portion of a company's profit that is distributed to its shareholders. It's like a pie – after making profit, the company cuts pieces of this pie to its shareholders as their share of the gains.

Examples in Different Contexts

Social enterprises might use 'dividends' to reward investors while balancing their social mission. A social entrepreneur could say, 'We allocate a portion of our profits as dividends and the rest goes to our community projects.'

Practice Scenarios

Business

Scenario:

Our company's profitability has grown over the current fiscal year. It may be prudent to reward our shareholders.

Response:

Given our current profitability, it is indeed the right time to consider a substantial dividend payout to our shareholders.

Accounting

Scenario:

This year's profit gives us some room to rethink our approach towards shareholder rewards. How should we balance?

Response:

Let's analyze our cash flow and then propose a balanced dividend payout ratio.