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 Michigan, as in other states, dividends are distributions of a company's earnings to its shareholders, which can be issued in the form of cash or additional stock. The decision to pay dividends, the amount, and the type of dividend (cash or stock) are determined by the company's board of directors. Dividends can be paid out on a regular schedule, such as quarterly or annually, or as a special, one-time distribution. The payment of dividends is subject to both state corporate law and federal securities regulations. Michigan's Business Corporation Act provides the legal framework within which corporations must operate when declaring and paying dividends, ensuring that dividends are paid only out of surplus or net profits without impairing the company's capital. Additionally, federal law, particularly through the Securities and Exchange Commission (SEC), imposes reporting requirements and other regulations to protect investors and maintain fair trading practices. It's important for companies to comply with these laws to avoid legal and financial penalties.