Define 'dividend' in the context of company shares.

A dividend, in the context of company shares, refers to a payment made by a corporation to its shareholders from the profits it has accrued. This distribution of profits serves as a reward to shareholders for their investment in the company and typically occurs on a regular basis, often quarterly or annually. Dividends can be issued in cash or as additional shares, and they signify the company's profitability and commitment to sharing its success with the owners of its equity.

The correct understanding of dividends is essential for investors as it can affect their decisions on whether to buy, hold, or sell shares. Companies that consistently pay dividends are often seen as financially stable and less risky, making their shares more attractive to investors looking for regular income.

Other choices, while related to corporate finance, do not accurately define dividends. The method of issuing new shares pertains to equity financing and shareholder structure, the total value of shares owned reflects shareholder equity, and a tax on profits relates to corporate taxation, none of which directly describe dividends or their purpose within corporate finance.