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Share of profits paid by a company to its ordinary shareholders. Ordinary shares ( equity ) dont have a fixed rate of dividend and the company decides on the % each year according to the amount of profit made When a company calculate its profit, it decides how much to save in reserve and to use for expansion; it also has to pay corporation tax, which is the tax paid by companies on their profits. If the company doesn't make enough profit, or if it makes a loss, it wont declare a dividend and the shareholders will get no return for that year. This is the risk they take and it balances the fact that they may receive a high % in a good year. 2.10 - DIVIDENDS The amount left can be distributed to the chareholders as dividend which is the return ...
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