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Dividends Paid |
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WIKI ANALYSIS| This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition. |
Dividends Paid is the sum of money or Dividends issued to shareholders of a company
Dividends paid are recorded on a company's cash flow statement as a financing activity as they represent an outflow of cash from the company to its shareholders. Dividends paid represent a reduction in retained earnings for the company so only established, stable companies pay out dividends. Smaller companies will retain all of their earnings and reinvest them into the company.
Dividends paid are extremely important to income investors as it identifies the amount of cash paid out by the company to its investors. A consistent, stable amount of dividends paid also demonstrates the ability to generate cash flow and continue funding its operations.
Examples
- Company XYZ issued a $ 0.10 dividend to its 100,000 shareholders in 2008. In Company XYZ's cash flow statement, they recorded a cash outflow of $10,000.
- A snapshot of General Electric Company (GE)'s cash flow statement. See the line called Payment of Cash Dividends to get a sense for the cash outflow from GE to its investors from 2005 to 2008:
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