What is a Declared Dividend?

A declared dividend is a portion of retained earnings that the board of directors has voted to issue to shareholders. At the time of this vote, the board also announces the date on which the declared dividend will be paid. Once declared, a dividend becomes a liability of the corporation until it is paid. A dividend is usually paid in cash, but can also be paid in stock or with an asset other than cash.

Example of a Declared Dividend

On October 1, Calcification Corporation's board of directors announced (or "declared") a dividend of $0.50 per share to be paid out to shareholders. The company set the record date for October 15, meaning only shareholders who hold shares as of this date are eligible to receive the dividend. Finally, the payment date is October 31, when the company will actually distribute the dividend to shareholders of record.