A Dividend is a way for a company to distribute its net earnings to its shareholders. The Dividend amount is decided by the company’s board of directors, and can be issued as a cash payment, shares or other assets.

When a Dividend is paid, the company’s value is immediately affected for the simple reason that the cash it is giving out as a Dividend will no longer belong to the company, so the share price decreases in line with the Dividend payment.

The change in the share’s price takes place on the ex-Dividend date.