Dividends are a form of income that shareholders of corporations receive for each share of stock that they hold. These payments -- from a corporation's profits or from its accumulated retained earnings -- are in cash or other assets (excluding the corporation's own stock). The definition of dividends in the System of National Accounts 2008 (SNA) -- the international guidelines for national accounting -- is consistent with this definition.
Although dividends are theoretically paid out of the current period's operating surplus, corporations typically smooth the payments of dividends, often paying out less than their operating surplus but sometimes paying out a little more. Additionally, when a company increases the amount of its normal dividend, then there is an expectation that this will be a sustained increase.
For practical reasons, the SNA does not recommend attempting to align dividend payments with earnings except in one circumstance. The exception occurs when the dividends are disproportionately large relative to the recent level of a company's dividends and earnings. This type of payment, often referred to as a special dividend or a super dividend in SNA terminology, is declared by a company as a non-recurring payment and can result for several reasons, including changes to a company's financial structure, such as a merger or spin-off. If the level of dividend declared substantially exceeds the level of recent dividends and earnings, then the excess may be treated as a financial transaction, specifically as a withdrawal of owners' equity from the corporation, and not recorded as dividends. BEA has, on rare occasions, applied this treatment to exceptionally large payments of special dividends that result from changes to a company's financial structure.