A portion of profits that a company distributes among its shareholders is known as:

A dividend is a distribution of a portion of a company's earnings, decided by its board of directors, to a class of its shareholders. Dividends can be issued as cash payments, shares of stock, or other property. Companies pay dividends as a reward to investors for their investment and as a share of the company's profits.

• A: Dividends is correct because it precisely defines the portion of profits distributed to shareholders.
• B: Retained Earnings are the profits a company keeps to reinvest in its business or to pay off debt, rather than distributing them to shareholders. They are not distributed profits.
• C: Capital Gain refers to the profit an investor makes when selling an asset, like shares, for a price higher than the purchase price. This profit is realized by the investor, not distributed by the company.
• D: Bonus Shares (or stock dividends) are additional shares given to existing shareholders, usually from the company's reserves, rather than a direct cash distribution of profits.