Dividend purification is the practice of donating the portion of investment dividends that corresponds to a company's non-permissible income. Even Shariah-compliant stocks may generate a small percentage of revenue from impermissible sources (such as interest income on cash reserves), and purification ensures that the investor's earnings are cleansed.
The purification amount is calculated by multiplying the total dividends received by the company's purification ratio — the percentage of revenue derived from non-permissible sources. For example, if a company has a 2% purification ratio and you receive $1,000 in dividends, you would donate $20 to charity.
The purified amount is given as general charity (Sadaqah) and is not counted toward Zakat obligations. Purification is considered an ongoing responsibility for Muslim investors and should be calculated and paid regularly — either per dividend payment or aggregated quarterly or annually. Tools like Mizaan's Dividend Purifier automate this calculation.