Total Cash Common Dividends

Category

Income Statement

Units

Currency

US-GAAP elements

DividendsCommonStockCashPaymentsOfDividendsCommonStockCommonStockDividendsPerShareDeclared

Reference

ASC 505, Equity

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Total cash common dividends is the total amount of cash dividends a company declared to its common shareholders during a period. It measures how much of the company's earnings the board chose to return to common stockholders in cash, excluding dividends on preferred stock and dividends paid in additional shares.

Dividends are not an expense. They are a distribution of profit to owners, so they do not reduce net income. They reduce retained earnings when declared and cash when paid.

Declared cash dividends are tagged in XBRL as DividendsCommonStockCash, which includes amounts declared but not yet paid at period end. They appear in the statement of stockholders' equity as a reduction of retained earnings. The cash actually paid during the period appears in the financing section of the cash flow statement, tagged PaymentsOfDividendsCommonStock. Because a dividend is often declared in one quarter and paid in the next, the two figures can differ in any given period, although over a full year for a company with a steady dividend they are usually close.

Accounting for dividends falls under ASC 505. A dividend becomes a liability on the declaration date, when the board commits to pay it. Stock dividends and dividends paid in kind are excluded from this figure. Companies also report the dividend declared per share, tagged CommonStockDividendsPerShareDeclared, which multiplied by the shares entitled to it should roughly reproduce the total. Special or one-time dividends are included in the total, which can make a single period look unusually high.

Total cash common dividends is the numerator of the dividend payout ratio, which compares dividends with net income to show how much of earnings is distributed rather than reinvested. Many analysts also compare dividends with free cash flow, because a company paying out more than its free cash flow must fund the difference from its balance sheet or new borrowing. Dividends combined with share repurchases give total cash returned to shareholders.