Dividend
A dividend is a cash (or stock) distribution of residual earnings to shareholders, declared by the board and not a contractual coupon.
Definition
The board declares a dividend; the stock goes ex-div; holders of record are paid. It is not an expense. Specials, extras, and stock dividends are variants. Cuts are a signal because dividends are sticky by culture, not by indenture.
Why it matters
Income mandates, tax clients, and ‘quality’ screens all care. A covered, growing dividend is a capital-allocation claim; an uncovered one is a slow liquidation.
Case
A European bank holds the dividend through a CET1 scare and then cuts it in one print. The yield was never a coupon — it was a policy.
How to read it
Coverage = FCF / dividend. Look at the streak, the payout ratio, and whether buybacks are the residual or the priority.