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 New Mexico, 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 are determined by the company's board of directors. Dividends can be paid out regularly, such as quarterly or annually, or as special dividends that are nonrecurring. The payment of dividends is subject to both state corporate law and federal securities regulations. New Mexico's corporate statutes provide the legal framework within which corporations must operate when declaring and paying dividends, ensuring that such distributions do not violate the rights of any class of shareholders or the company's financial ability to operate. Companies must also comply with federal regulations, which can include reporting requirements and tax implications for the company and its shareholders. It is important for companies to manage their retained earnings, which are the profits not distributed as dividends, as these funds are often reinvested into the company for growth and operational purposes.