A dividend is a portion of profit that a company distributes to its shareholders rather than reinvesting in the business. It is declared by the board, usually as an amount per share, and is not guaranteed — a company can cut or skip it in a difficult year.
Key takeaways
- Dividends are paid out of profits, so a loss-making year usually means no payout.
- A high payout is not automatically good: it can mean the company sees little worth investing in.
- Total return is dividends plus price change, not either one alone.
In Ethiopia
Dividends are the return most Ethiopian bank shareholders are familiar with, since shares historically traded rarely and income came from the annual payout rather than from selling.
