Key Definitions of Corporate Stock and Dividends

Authorized Stock

The total amount of stock that a corporation is authorized to sell according to its charter.

Issued Stock

The total amount of stock that has been issued or sold to stockholders.

Outstanding Shares

Issued shares that are held by stockholders.

Par Value

An arbitrary amount assigned to each share of stock when it is authorized. It is not the same as market price.

Cash Dividend

A distribution of cash to stockholders. Payment of cash dividends requires a sufficient balance in retained earnings and the necessary cash.

Stock Dividend

A distribution of a corporation's own shares to its stockholders without any payment in return. It can be used to keep the market price of the stock affordable.

Stock Splits

A distribution of additional shares of stock to stockholders according to their percentage ownership.

Treasury Stock

Shares of a company's own stock that have been reacquired by the corporation. It reduces total stockholders' equity on the balance sheet.

Retained Earnings

The cumulative net income (or loss) that has not been distributed as dividends.

Preferred Stock

A separate class of stock that typically has priority over common shares in dividend distributions and asset distribution during liquidation. It usually has a stated dividend rate and typically no voting rights.

Cumulative Preferred Stock

Dividends in arrears must be paid before dividends may be paid on common stock.

Noncumulative Preferred Stock

Undeclared dividends from current and prior years do not have to be paid in future years.

Earnings Per Share

A widely cited accounting statistic calculated as (Net Income - Preferred Dividends) / Weighted Average Common Shares Outstanding.

Price-Earnings Ratio

Reveals information about the stock market's expectations for a company's future growth.

Dividend Yield

The annual amount of cash dividends distributed to common stockholders relative to the stock's market price.

Book Value per Share

The amount of stockholders' equity applicable to common shares on a per share basis.