What Is a Dividend? Dividends Explained for Beginners
A dividend is a portion of a company's profits distributed to its shareholders, usually in cash and usually per share. If you own 100 shares and the company declares a ₹5 dividend per share, you receive ₹500.
How dividends work
The board of directors decides whether to pay a dividend and how much, based on profits and cash needs. Mature, profitable companies tend to pay steady dividends; fast-growing companies often pay little or nothing, reinvesting profits into growth instead. A dividend is never guaranteed — it can be cut or skipped.
The key dates
- Declaration date — the company announces the dividend.
- Record date — you must be a registered shareholder on this date to be eligible.
- Ex-dividend date (ex-date) — the first day the stock trades without the right to the upcoming dividend. Buy on or after the ex-date and you miss this payout. In India the ex-date is typically one business day before the record date under the T+1 settlement cycle.
- Payment date — when the money actually reaches your account.
Dividend yield
Dividend yield expresses the annual dividend as a percentage of the share price (annual dividend per share ÷ price). A ₹5 dividend on a ₹100 stock is a 5% yield. Yield lets you compare the income from stocks at different prices, but a very high yield can be a warning sign — it sometimes means the price has fallen because the market expects trouble.
Finding dividend data
Dividends are a type of corporate action. You can see a company's dividend and other corporate-action history on its stock page, and the dividend yield alongside its other ratios. Developers can pull the full history from the corporate-actions endpoint.