companydata.dkDividend (udbytte)
A dividend (udbytte) is the part of a company's profit distributed to the owners rather than retained in the business. Ordinary dividends are approved at the general meeting based on the annual report.
Dividends can only be paid out of free reserves — a company must not distribute more than its equity can prudently bear. In addition to the ordinary dividend, the board can distribute extraordinary dividends during the year if the articles of association allow it.
Dividends as a signal
Stable dividends often indicate solid earnings. But aggressive distribution — e.g. dividends exceeding the year's result year after year — drains equity and weakens creditors' position. In groups, profits are often lifted up to a holding company precisely via dividends.
Related terms
Net result (årets resultat)
The net result (årets resultat) is the bottom line of the financial statements: the company's total profit or loss for the fiscal year after all costs, financial items, and tax have been deducted.
Equity (egenkapital)
Equity (egenkapital) is the difference between a company's assets and its liabilities — the owners' share of the company. It typically consists of share capital, retained earnings, and any reserves.
Holding company (holdingselskab)
A holding company (holdingselskab) is a company (typically an ApS or A/S) whose primary purpose is to own shares in other companies rather than run its own operations. The structure is used to separate risk and defer tax.