OMTEX CLASSES: Features of Dividend?

Features of Dividend?

Meaning: -The word 'Dividend' is derived from the Latin word 'Dividentum'. Dividentum means 'which is to be divided.

Definition: - According to Justice Gulam Hasan "Dividend is that portion of corporate profit which has been set aside and declared by the company as liable to be distributed among the shareholders".

Definition: - According to the Supreme Court of India "Dividend means the portion of the profits of the company which is allocated to the holders of shares of the company".

Features of Dividend are as follows: -
1.      Dividend is a portion of profit paid to the shareholders.
2.      Dividend is payable only out of the profits of the company.
3.      The rate of dividend may vary from year to year (except for preference shares) s profits vary.
4.      Dividend is not allowed to be declared and paid out of capital.
5.      Dividend is recommended by the Board of Directors and sanctioned by the shareholders in Annual General Meeting.

6.      Dividend is a reward given to the shareholders on their investment in the company.