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LSDefine
Simple English definitions for legal terms
deferred dividend
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A quick definition of deferred dividend:
A deferred dividend is a part of a company's earnings or profits that is set aside to be paid to its shareholders at a later date. It is like a promise to pay the shareholders in the future. Dividends are usually paid in cash or additional shares, but a deferred dividend is not paid immediately. It is declared by the company and will be paid at a later time.A more thorough explanation:
A deferred dividend is a portion of a company's earnings or profits that is declared but not paid out to shareholders until a future date. It is a type of dividend that is postponed for payment.
For example, if a company declares a dividend in January but decides to pay it out in June, it is considered a deferred dividend. The shareholders will receive the dividend in June instead of January.
Deferred dividends are usually paid out when a company wants to retain its earnings for future investments or to pay off debts. It can also be used as a way to manage cash flow and ensure that the company has enough funds to operate smoothly.