Final answer:
A regular cash dividend is a distribution by a firm to its shareholders, representing a part of the firm's profits. It's paid consistently during the firm's normal operations and is an element of the shareholder's total rate of return, alongside capital gains.
Step-by-step explanation:
A regular cash dividend is best defined as a distribution by a firm to its shareholders as part of the firm's normal operations. When a company pays a dividend, it is effectively distributing a portion of its profits directly to the stock owners. The amount of the dividend is typically expressed on a per-share basis. For instance, if a company pays a dividend of $0.75 per share, an individual owning 100 shares would receive $75 in total. Firms like Coca-Cola and various utility companies are known for providing regular dividends to their shareholders as they often have stable and predictable earnings, thus enabling them to offer such dividends consistently.
Investors consider dividends as one aspect of the total rate of return on their investments. The other component is capital gains, referring to the increase in the stock value between when one buys and sells it. Together, both dividends and capital gains contribute to the attractiveness of investing in a particular stock. Regular cash dividends are a direct way to reward shareholders, signifying the firm's profitability and financial health.