Question

How many times per year is common stock cash dividend paid

Answer 1

Answer:

Companies that earn a profit can either pay that profit out to shareholders, reinvest it in the business through expansion, debt reduction or share repurchases, or both. When part of the profit is paid out to shareholders, the payment is known as a dividend. For many investors, "living off dividends" is the ultimate goal (for more information about this, you can read the 10-Part Guide to Income Investing).

The Dividend Process

Dividends must be declared (i.e., approved) by a company’s Board of Directors each time they are paid. There are three important dates to remember regarding dividends:

Cash Dividends

Regular cash dividends are those paid out of a company’s profits to the owners of the business (i.e., the shareholders). A company that has preferred stock issued must make the dividend payment on those shares before a single penny can be paid out to the common stockholders. The preferred stock dividend is usually set whereas the common stock dividend is determined at the sole discretion of the Board of Directors (for reasons discussed later, most companies are hesitant to increase or decrease the dividend on their common stock). You can find a detailed discussion of preferred stock and its dividend provisions in The Many Flavors of Preferred Stock: A Possible Investment for Your Fixed Income Portfolio.