Corporations, like iConsumer, can choose to distribute cash to their shareholders. When a corporation does that, it is called a dividend.

It is one important way that the company can reward shareholders for owning the company’s stock.

Sometimes, shareholders of a certain class or kind of stock have been given special rights or preferences. Often, one of those preferences is the right to receive dividends before holders of a different class of stock can receive dividends.

The payment of dividends is not guaranteed.

Usually, a company has to be profitable to pay dividends, but it isn’t required.

Usually, companies do not pay dividends if the company believes it needs the cash to operate the business in a smart manner. It must balance that against the desire of shareholders to be rewarded for owning the stock.

Usually, start up companies do not pay dividends.

Just like most things, this is s simple explanation. There are other kinds of dividends that are beyond the scope of this entry.