Dividends is a way to distribute the profits of the company to its share holders. Suppose a company makes Rs.100 as profit, they can decide to distribute 50 out of 100 to its shareholders.
Dividends can be paid out anytime during the financial year or it can be paid out at the end of the financial year. If its paid during the year its called interim dividend, if its paid at the end of FY its called Final Div.
You maybe interested to know that the dividends at the hands of the share holders is totally exempted of tax!
If you wish to understand the concept in more details, then please look at the following illustration of Infosys that I've made for you..
