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 Connecticut, as in other states, the payment of dividends is governed by state corporate law and the specific company's articles of incorporation and bylaws. Under Connecticut law, a corporation can distribute dividends to its shareholders out of its net profits or from its surplus (the amount by which the company's assets exceed its liabilities) as long as the company remains solvent after the distribution. The board of directors of the company has the authority to decide if dividends will be paid, to which class of shareholders, and in what form—whether cash or additional stock. Dividends can be issued on a regular basis, such as quarterly or annually, or as a special, one-time distribution. The decision to pay dividends must comply with the Connecticut Business Corporation Act and any other relevant state statutes, as well as federal regulations if the company is publicly traded. It's important for companies to ensure that dividend payments do not violate any contractual agreements or the rights of shareholders.