The date on when a dividend becomes a binding legal obligation is know as the declaration date.
Dividends:
A dividend is a distribution of a company’s earnings to its shareholders. Typically the companies board of directors decides on declaration dates, the amount and the form of payment of the dividend. Companies usually distribute dividends quarterly or monthly. Companies typically pay dividends in cash or in the form of reinvestment in additional shares of stock.
Dividend Yield:
A dividend yield is the amount the company pays per share of stock. The figure is expressed as the amount of the dividend paid on an annualized basis, divided by the companies share price. For example, if the company pays $2 dollars per share, and trades at a value of $100, the dividend yield would be 2%.
The Advantages of Dividends:
Dividends are a form of passive income in which investors do not need to actively work for payouts. This type of earnings varies depending on the profitability of the company. Financially established companies most commonly pay dividends. This is because these types of companies are often beyond their high growth phase and have made strategic decisions to return profits to their shareholders.
For more on this topic, consider reading:
Investopedia’s comprehensive article on on dividends
Benjamin Graham’s Classic book: Security Analysis.