Dividend
A distribution of a company's profits to its shareholders, paid in cash out of distributable reserves.
Formula
Total Dividend Paid = Dividend per Share x Number of Shares Outstanding
Unit
₹
In depth
A dividend transfers value from the company to shareholders rather than creating it: the share price falls by approximately the dividend on the ex-date, so the holder is no better off before tax. Its informational value is what it signals about the board's confidence in sustainable cash generation, since cutting a dividend is embarrassing and boards avoid it. Since 2020 dividends are taxed in the shareholder's hands at slab rates in India, with tax deducted at source above a threshold, which made them less attractive than capital gains for higher-bracket investors. Dividends must be paid from profits, not from reserves that are legally restricted.
Worked example
A company earning ₹90 crore pays ₹1.20 per share on 30 crore shares, or ₹36 crore. At a share price of ₹60 the yield is 2%, and the price typically opens about ₹1.20 lower on the ex-date.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Dividend” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.