Dividend, from the Latin dividendus , is the amount or number to be divided by another or another. In the arithmetic operation of division, you try to find out how many times the divisor is contained in the dividend. The integer result of the division is called a quotient.
For example: if we divide 16 into 2 (16/2), we will have 2 as a divisor and 16 as a dividend. The 8 is the result of the operation, that is, the quotient.
It can be said, therefore, that the dividend is equal to the quotient times the divisor plus the remainder. In our previous example: 16 = 8 × 2 + 0.
In the account 45/5 = 9, 45 is the dividend, 5 is the divisor and 9 is the quotient (45 = 9 × 5 + 0).
In the field of economy and finance, the dividend is the return on investment that a company grants to its shareholders according to the number of shares of each. The dividend is paid with resources that originate in the profits of the company during a certain period and can be paid both in money and in more shares.
The General Assembly of Shareholders of a company is in charge of deciding when and how dividends are paid. If it is decided that 0.25 pesos will be paid for each share, the person who has 5,000 shares will receive 1,250 pesos. On the other hand, if the decision is to distribute the dividends in shares and a remuneration of one share is set for every 80 shares held, the subject of the previous example will receive 62 shares.
Active dividend
It is known by the name of active dividend to a portion of the profit obtained by a commercial company, which must be distributed among its partners, according to the agreements of its corporate bodies. In other words, it is a credit that each member has, once its distribution is decided.Every year, mercantile companies are legally obliged to close accounts, which generally takes place on the last day of the calendar year, although this may vary according to the needs of the partners and is specified in their statutes.
The Profit and Loss Account (P and G) is one of the accounting statements that derive from the closing, and consists of the data of the result that the company has obtained during the fiscal year to which said account refers. When profits are obtained, it is necessary to: compensate for the losses that have accumulated in previous years and that decrease the value of the net worth with respect to its capital stock; endow reserves, both legal and statutory (if the statutes provide for them).
At this point, it is possible to distribute the profit obtained among the partners, according to the decision made by the General Shareholders' Meeting, which includes the amount, the payment method and the date on which the distribution will be made; one of the possibilities is to carry it out on account of future profits. For the latter to be fulfilled, it is necessary that:
* the administrators of the company can justify the existence of sufficient liquidity;
* the dividend in question is not greater than the magnitude of the results obtained since the end of the previous year;
* Sufficient amounts are not distributed to compensate the losses of the past years, to satisfy the income tax that is expected to be received and to endow the reserves.
Passive dividend
This is the credit that a company can hold against the partner who has not paid up the total of the subscribed shares as a result of the founding of the company or of capital growth through the issuance of new shares. Until the shareholder pays the passive dividends, the right to vote at the General Meetings, to preferential subscription and to receive dividends, is not returned. Likewise, the arrears must be compensated by means of default interest.