How are dividends typically paid to shareholders?

Dividends are typically paid to shareholders from the profits earned by the corporation. When a company generates a profit after accounting for expenses, taxes, and other obligations, it may choose to distribute a portion of that profit to its shareholders in the form of dividends. This distribution reflects the company's commitment to rewarding its shareholders for their investment and trust in the business.

The amount and frequency of the dividend payments are determined by the company's board of directors and can vary based on the company's financial performance, cash flow needs, and dividend policy. By paying dividends, a corporation signals its financial health and stability, as consistent dividend payments often attract investors looking for reliable income.

The other options do not accurately represent how dividends are paid. Dividends are not based on a percentage of overall assets, nor are they derived from reinvested capital gains. Additionally, dividends are not considered non-refundable investments made by shareholders; rather, they are distributions of earnings to shareholders who have already purchased shares.