What is a 'Residual Dividend'
A residual dividend is a method of calculating dividends. A dividend is a payment made by a company to its shareholders. It is essentially a portion of the company's profits that is divided amongst the people who own stock in the company. A residual dividend policy is one where a company uses residual or leftover equity to fund dividend payments. Typically, this method of dividend payment creates volatility in the dividend payments that may be undesirable for some investors.
BREAKING DOWN 'Residual Dividend'
Companies that use the residual dividend policy first use the cash flow to fullfill necessary capital expenditures and the remaining amount available (the residual) is paid out to shareholders. Also, if the company is maintaining a certain target debt to equity capital structure, then the full amount of the capital expenditure will not be paid entirely by equity but also with part debt.

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Is residual income considered profit?
Understand what residual income is and under what circumstances it may be considered profit. Learn how this can benefit personal ... Read Answer >> 
What is the difference between residual income and operational income?
Understand the key factors that go into calculating operational and residual income, as well as what each of these categories ... Read Answer >> 
How is residual value of assets taxed?
Find out how and when taxes are assessed on the different kinds of residual value, including the residual value on a leased ... Read Answer >> 
Can I receive dividends on ordinary shares of a company?
Understand the basics of collecting dividend payments on ordinary shares, including when dividends can be paid and under ... Read Answer >> 
Which is better a cash dividend or a stock dividend?
The purpose of dividends is to return wealth back to the shareholders of a company. There are two main types of dividends: ... Read Answer >> 
Can dividends be paid out monthly?
Find out if stocks can pay dividends monthly, and learn about the types of companies most likely to do so and how monthly ... Read Answer >>