Glossary: Dividends Dividend - Dividends are designated by the Board of directors. They are distributed pro-rata. Preferred shares have fixed dividend amounts. After a dividend is paid, (on the ex-dividend date) stock prices are adjusted down. A 60-cent dividend will cause the stock price to drop 5/8. Specialists reduce all orders below the market unless they are marked DNR (do not reduce). 100% of dividends go into your SMA when you are on margin. Dividends are taken from the corporation's net income. This means that they have already paid taxes on that income. As an investor, when you receive a dividend you also pay taxes on the income. This is Double Taxation. Some people prefer capital appreciation and would rather the company buy back its own stock instead of paying out the income as a dividend.

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Dividend - some related terms: Director Ex dividend Margin Preferred stocks DNR Special memorandum account Arrearage Averages Balanced fund Coverage Cumulative preferred shares Declaration date Director Dividend pay out ratio Dividend reinvestment Dividend yield DNR Order EPS Ex dividend Extra dividend Guaranteed Non cumulative Participating preferred Passed dividend Portfolio income Preferred dividend coverage Record date Regulated mutual fund Return on common equity Rights of common stock Treasury stock