Dividend payments refer to the distribution of a portion of a company's profits to its shareholders. When a corporation earns a profit or net income, it is not required to distribute all of it as dividends; instead, some of it can be reinvested in the business, which helps to grow and expand the company. However, if the board of directors decides that there are excess funds available for distribution, they may declare a dividend payment to shareholders.
Dividend payments come in different forms such as cash or stocks, depending on what the company's policy is. Cash dividends refer to money paid out to shareholders, while stock dividends involve issuing additional shares of stock to existing shareholders free of charge. The amount and frequency of dividend payments can vary from one company to another, as well as over time based on the financial performance of the business.
In summary, dividend payments are a way for companies to distribute their profits to shareholders, providing them with an income stream or opportunity for capital gains.