Cash Dividend

Money paid to stockholders, normally out of the corporation's current earnings or accumulated profits. All dividends must be declared by the board of directors and are taxable as income to the recipients.

Investopedia Says:
Long-term investors who want to maximize their gains should consider reinvesting the dividends. Most brokers offer a choice as to whether you wish to reinvest or take cash dividends.

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Usual type of dividend paid to stockholders. It is typically expressed on a dollar-and-cents-per-share basis. However, with preferred stock, the dividend is expressed as a percentage of par value. Dividends are paid on outstanding shares. Assume on 11/15/2005, a cash dividend of $1.50 per common share is declared. Issued shares are 12,000 and treasury shares are 2000. The record date is 12/20/2005. Payment is to be made on 1/15/2006. The entry on 11/15/2005 is to debit retained earnings and credit cash dividends payable for $15,000 (10,000 shares x $1.50). Cash dividends payable is a current liability. No entry is made on the record date. On 1/15/2006, cash dividends payable is debited and cash credited for $15,000. Assume there are 30,000 shares of $10 par value, 8% preferred stock.

The cash dividend is: