Business / Finance Glossary

Diversified Investment Company: Dividing investment funds among a variety of securities with different risk, reward, and correlation statistics so as to minimize unsystematic risk.

Divestiture: An investment vehicle such as a mutual fund that invests in an assortment of securities.

Dividend: A complete asset or investment disposal such as outright sale or liquidation.

Dividend Clawback: A portion of a company's profit paid to common and preferred shareholders. A stock selling for $20 a share with an annual dividend of $1 a share yields the investor 5%.

Dividend Clientele: An arrangement under which sponsors of a project agree to contribute as equity any prior dividends received from the project to the extent necessary to cover any cash deficiencies.

Dividend Discount Model (DDM): A group of shareholders who prefer that the firm follow a particular dividend policy. Such a preference may be based on comparable tax situations.

Dividend Growth Model: A method to value the common stock of a company that is based on the present value of the expected future dividends.

Dividend In Arrears: An approach that assumes dividends grow at a constant rate in perpetuity. The value of the stock equals next year's dividends divided by the difference between the required rate of return an . . . View Full Definition

Dividend Limitation: Accumulated dividends on cumulative preferred stock that are deemed payable to the current holder.

Dividend Payout Ratio: A bond covenant that restricts in some way the firm's ability to pay cash dividends.

Dividend Policy: Percentage of earnings paid out as dividends.

Dividend Rate: Standards by which a firm determines the amount of money it will pay as dividends.

Dividend Record: The fixed or floating rate paid on preferred stock based on par value.

Dividend Reinvestment Plan (DRP): S&P publication stating companies' payment histories and corporate policies.

Dividend Requirement: Automatic reinvestment of shareholder dividends in more shares of a company's stock, often without commissions. Some plans provide for the purchase of additional shares at a discount to mark . . . View Full Definition

Dividend Rights: The annual earnings minimum required for payment of dividends on a preferred stock.

Dividend Rollover Plan: A shareholder's rights to receive per-share dividends identical to those other shareholders receive.

Dividend Trade Roll-Play: An investment strategy that entails the purchase and selling of a stock right before its ex-dividend date in order to collect the dividends paid out by the stock and capture a trade profit.

Dividend Yield: Used for listed equity securities. Method of buying and selling stocks around their ex-dividend dates so as to collect the dividend (which is 80% tax-exempt) offset by a fully-taxable capita . . . View Full Definition

Dividend Yield (Funds): Annual dividends per share as a percent of the average annual High-Low price. Current yield is based on last 12 months' or on indicated annual dividend rate whenever possible.

Dividend Yield (Stocks): Indicated yield represents return on a share of a mutual fund held over the past 12 months. Assumes fund was purchased a year ago. Reflects effect of sales charges (at current rates), but no . . . View Full Definition

Dividends 12 Months: Each year's cash dividends per share as a percent of earnings per share reported for the same year. Dividends include all cash extras (but not stock dividends).

Dividends Payable: Cash dividends declared per share for the last 12 months. All stock dividends are noted and all per share items are adjusted (as of ex-dividend date) proportionately.

Dividends Per Share: The declared dividend dollar amount that a company is obligated to pay.

Dividends Percent Of Earnings: Indicated yield represents annual dividends divided by current stock price.

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