Invisible Gold

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Dividends

A dividend is the payment designated by the board of directors to be distributed pro rata among the shares outstanding. For preferred shares, the dividend is usually a fixed amount. For common shares, the dividend varies with the company's fortunes and the amount of cash on hand and may be omitted if business is poor or if the directors determine to withhold earnings to invest in plants and equipment. Sometimes a company will pay a dividend out of past earnings, even if it is not currently operating at a profit. A dividend can either be paid in cash or reinvested into the security.