A dividend can be described as a reward that publicly listed companies extend to their shareholders, and its source is the company’s net profit. Such rewards can either be in the form of cash, cash equivalent, shares, etc. and are mostly paid from the remaining share of profit once essential expenses are met. A company’s board of directors decides the rate of dividend, wherein the approval of majority shareholders is also factored in. However, companies may decide to retain their accumulated profits to reinvest in the business or reserve them for future use. Further, announcements about dividend income declaration mostly accompany a significant change in the company’s stock value.