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A dividend is a distribution to some or all shareholders of some portion of a company’s earnings—usually from its net profits. The profits retained by the company (and not paid as dividends) are known as retained earnings.

A company’s board of directors may decide to pay a dividend to one or more classes of shareholders, or to all shareholders. Dividends may be paid as cash or as additional stock. And dividends may be paid at a scheduled frequency or as a special dividend on a nonrecurring basis.

In Colorado, as in other states, dividends are distributions of a company's earnings to its shareholders, and they can be issued in the form of cash or additional stock. The decision to pay dividends, the amount, and the type are determined by the company's board of directors. Dividends can be paid out regularly, such as quarterly or annually, or as special dividends on a nonrecurring basis. The payment of dividends is subject to the company's profitability and its need to retain earnings for business growth and operations. Colorado's corporate statutes do not prescribe specific rules for the payment of dividends but require that they be paid from surplus or net profits and not out of the company's capital. The board must ensure that the payment of dividends does not render the company insolvent. Shareholders in Colorado are entitled to receive dividends if declared by the board, and the distribution must be equitable among shareholders of the same class.

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