The payments designated by the Board of Directors to be distributed among the shares outstanding. The type of share determines the amount. On preferred shares, it is generally a fixed amount. With common shares, the dividend can be omitted if the Directors decide to invest the money in a capital expenditure or if the business is slumping. If the dividend is paid, the amount varies depending on the amount of cash on hand.
There are several types of dividends:
Cumulative—Missed dividend payments that continue to accrue.
Non-cumulative—Missed dividend payments that do not accrue.
Participating—Dividends which share (participate) with common stock.
Non-participating—Dividends which do not share with common stock.