A dividend is a distribution to some or all shareholders of some portion of a company’s earnings—usually from its net profits. The profits retained by the company (and not paid as dividends) are known as retained earnings.

A company’s board of directors may decide to pay a dividend to one or more classes of shareholders, or to all shareholders. Dividends may be paid as cash or as additional stock. And dividends may be paid at a scheduled frequency or as a special dividend on a nonrecurring basis.

In Maryland, the payment of dividends by a company is governed by the Maryland General Corporation Law. The law allows a company's board of directors to declare and pay dividends to shareholders, provided that the payment of such dividends does not render the company insolvent or unable to pay its debts as they become due. Dividends can be paid out of the company's surplus (the excess of net assets over the amount determined to be capital by the board of directors) or, if there is no surplus, out of the company's net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Maryland law permits dividends to be paid in cash, property, or in the form of additional stock. The frequency and form of dividend distributions are typically outlined in the company's bylaws or determined by the board of directors. It is important for companies to comply with these regulations to ensure that dividends are distributed legally and fairly among shareholders.