Distributions
Payments from fund or corporate cash flow. May include dividends from
earnings, capital gains from sale of portfolio holdings and return of capital. Fund
distributions can be made by check or by investing in additional shares. Funds
are required to distribute capital gains (if any) to shareholders at least once per
year. Some corporations offer Dividend Reinvestment Plans (D.R.P.).
Divergence
When two or more averages or indices fail to show confirming trends.
Diversifiable risk
Related: unsystematic risk.
Diversification
Dividing investment funds among a variety of securities with different risk,
reward, and correlation statistics so as to minimize unsystematic risk.
Dividend
A dividend is a portion of a company's profit paid to common and preferred
shareholders. A stock selling for $20 a share with an annual dividend of $1 a
share yields the investor 5%.
Dividend clawback
With respect to a project financing, an arrangement under which the sponsors of
a project agree to contribute as equity any prior dividends received from the
project to the extent necessary to cover any cash deficiencies.
Dividend clientele
A group of shareholders who prefer that the firm follow a particular dividend
policy. For example, such a preference is often based on comparable tax
situations.
Dividend Discount Model (DDM)
A model for valuing the common stock of a company, based on the present value
of the expected future dividends.
