Final answer:
Corporations distribute profits to owners through dividends, which are payments made from the company's earnings based on the number of shares owned.
Step-by-step explanation:
Corporations distribute profits to their owners through dividends. A dividend is a direct payment from a company to its shareholders, representing a portion of the company's earnings. When a company pays a dividend, it is giving some of its profits directly to the stock owners. The amount a shareholder receives is typically proportional to the number of shares they own.
For example, if a stock pays a dividend of 75 cents per share, a person who owns 85 shares will receive a total dividend payment based on that rate. Unlike bonds, which require companies to make interest payments regardless of profitability, dividends are typically distributed as a result of the company having excess profits and a decision by the board to return some of those profits to its shareholders.