The payment of a share in the profits of a company to its shareholders. Dividends are so called because a company is legally required to divide any sum available for distribution between its shareholders in proportion to the number of shares held. The sum to be paid out in dividends is chosen by the board of directors. Most companies prefer to slowly increase dividends over time because any decrease in dividends is seen as a bad signal on financial markets. Cooperative society dividends are payments to customers who are members, the total sum available being divided between customers in proportion to the value of their purchases. See also cum dividend; ex dividend; stock dividend.