By VestAI Research | Last updated: March 2026
Dividend: Meaning, Definition & Indian Stock Market Examples
Cash distribution from company profits to shareholders.
What is Dividend?
A dividend is a distribution of a portion of a company's profits to its shareholders, usually in cash. In India, dividends are declared by the company's board and approved at the Annual General Meeting (AGM). Key dates: Record Date (must hold shares to receive dividend), Ex-Dividend Date (first day of trading without dividend rights), Payment Date.
Dividend — Indian Stock Market Example
Coal India consistently pays high dividends (yield 6–9%) as SEBI/government requires PSUs to distribute 30% of profits as dividends. Infosys has paid special dividends multiple times. TCS buybacks often replace traditional dividends. ITC's high dividend yield attracted income investors for years.
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What is the difference between interim and final dividend?
Interim dividend: paid during the financial year before final accounts are prepared — subject to board approval only. Final dividend: declared at the AGM after full-year results — requires shareholder approval. Final dividends are more stable and represent the company's firm commitment; interim dividends can be adjusted based on annual results.
What happens to the share price after dividend payment?
On the ex-dividend date, the stock price theoretically drops by the dividend amount, as buyers after this date do not receive the dividend. In practice, the price drop may be more or less than the dividend due to market sentiment. For long-term investors, reinvesting dividends (DRIP equivalent) adds significant long-term return through compounding.
Related Terms
Dividend Yield
Annual dividend per share ÷ stock price — income return from holding a stock.
Free Cash Flow
Operating cash flow minus capex — actual cash available after maintaining business.
Share Buyback
Company repurchasing its own shares — reduces share count, increases EPS.
Earnings Per Share
Net profit divided by total shares — profit attributable to each share.
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