noun div·i·dend \ ˈdi-və-ˌdend , -dənd \
Updated on: 26 Jul 2017

Definition of dividend

1 :an individual share of something distributed: such as
a :a share in a pro rata distribution (as of profits) to stockholders
  • Profits are distributed to shareholders as dividends.
b :a share of surplus allocated to a policyholder in a participating insurance policy
2 a :a resultant return or reward
  • our efforts are finally paying dividends
b :bonus
3 a mathematics :a number to be divided
b :a sum or fund to be divided and distributed


play \-ləs\ adjective

Examples of dividend in a Sentence

  1. Profits are distributed to shareholders as dividends.

  2. the reward money was an unexpected dividend for our good deed

Recent Examples of dividend from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'dividend.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of dividend

Middle English divident, from Latin dividendus, gerundive of dividere — see 1divide

Financial Definition of DIVIDEND


What It Is

A cumulative dividend is a dividend, usually on preferred shares, that must be paid before any other dividends on any of the issuer's other securities. Preferred stock that does not carry a cumulative dividend is referred to as "straight preferred."

How It Works

Let's assume Company XYZ issues some preferred stock with a $1-per-share cumulative quarterly dividend. Company XYZ also has some common stock outstanding on which the company paid a $0.50-per-share dividend last quarter.

Now let's assume a recession has taken a toll on Company XYZ's cash flow, and the board has decided to suspend dividend payments. Because the preferred shares have a cumulative dividend, once Company XYZ decides to resume making dividend distributions, it must first "catch up" on any missed dividends payments to the preferred shareholders (those outstanding the longest are paid first). Then it can resume making dividend payments to the holders of its common stock. It must do this even if it does not completely suspend the preferred dividends; reducing them creates a similar obligation.

Why It Matters

Preferred shares that have cumulative dividends often have slightly higher rates of return than straight preferred because cumulative preferred carries the added risk of possibly not receiving regularly scheduled dividend payments.

DIVIDEND Defined for English Language Learners



Definition of dividend for English Language Learners

  • finance : an amount of a company's profits that the company pays to people who own stock in the company

  • : an advantage or benefit that you get because of something you have done

  • mathematics : a number that is being divided by another number

DIVIDEND Defined for Kids


noun div·i·dend \ ˈdi-və-ˌdend \

Definition of dividend for Students

1 :a number to be divided by another number
2 :an amount of a company's profits that is paid to the owners of its stock

Law Dictionary


noun div·i·dend \ ˈdi-və-ˌdend \

legal Definition of dividend

1 :the part of corporate net earnings distributed usually periodically (as quarterly) to stockholders in the form of cash, additional shares, or property either as a set amount per share or a percentage of par value
constructive dividend
:a benefit (as unreasonable compensation or use of corporate property) or transfer of funds from a corporation to a shareholder that is interpreted by a taxing authority as a dividend
cumulative dividend
:a dividend distributed to preferred stockholders that is added to and paid with the next payment or future payments if not paid when due
extraordinary dividend
:a dividend declared in addition to a regular dividend because of unanticipated profits or a nonrecurring increase of revenue
2 :a share of the surplus earnings of a mutual insurance company paid to policyholders either in the form of cash disbursements or through reduction of premiums
3 :a payment disbursed to investors from the income of a mutual fund

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of yeast or being unsettled or frivolous

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