What are Dividends?

Companies that generate profits through the course of their business routinely distribute a portion of them to their shareholders. These profit distribution payments are termed dividends and are usually issued on a semi-annual or annual basis. However, companies may choose to distribute them every quarter as well. Dividends in the stock market are generally expressed as a percentage of the face value of the shares or as a fixed amount per share. For instance, a company may declare an annual dividend of Rs. 10 per share or 200% of its face value of Rs. 5 per share.