stock dividend

noun

|Updated on: 18 Jun 2018

Definition of stock dividend

1 : the payment by a corporation of a dividend in the form of shares usually of its own stock without change in par value — compare stock split

2 : the stock distributed in a stock dividend

Recent Examples of stock dividend from the Web

Combined with stock dividend payments over the previous year, money returned to shareholders in S&P 500 companies topped $1 trillion for the first time, Silverblatt said.

— jim puzzanghera, latimes.com, "Businesses hiked spending after the tax bill, but the U.S. economy still awaits that promised big boost," 8 June 2018
Businesses to date have largely used their tax windfall to buy back shares and pay bigger stock dividends.

— mark zandi, Philly.com, "Corporate America loved Trump tax cuts, but the love affair may end," 25 May 2018
If validated in court, the suit would also bless the board’s plan to issue a special stock dividend to massively dilute the Redstones’ voting power in CBS from about 80 percent to 17 percent.

— william d. cohan, The Hive, "“The Nuclear Option”: With CBS Going to Court, Shari Redstone’s “Kabuki Theater” Falls Apart," 14 May 2018
The judge declined to opine on CBS’s contention, vigorously disputed by NAI, that the company’s certificate of incorporation authorizes the board to approve a stock dividend that would dilute NAI’s voting power.

— randall chase, BostonGlobe.com, "Judge denies CBS restraining order against major shareholder," 18 May 2018
The board of directors of CBS on Thursday voted 11-to-3 to issue a stock dividend, a move that would effectively remove National Amusements as the controlling shareholder of CBS.

— NBC News, "CBS votes to kick out parent company National Amusements, setting up court battle," 18 May 2018
The board planned to vote on a special stock dividend that would drastically water down the Redstone family’s voting stake at CBS to 17 percent from 79 percent — a move that would give Mr. Moonves more freedom to reject a merger with Viacom.

— New York Times, "CBS Tries to Sell Its TV Dramas as Its Own Battle Heats Up in Court," 16 May 2018
Investment income that mostly flows to the richest households, such as capital gains and stock dividends, is usually subject to state income taxes.

— steve wamhoff, Fortune, "Commentary: States Are Trying to Fix the New Tax Bill. But They Might End Up Making It Worse.," 18 Jan. 2018
Critics have called such announcements nothing more than publicity stunts, and some experts have said companies will likely spend much of the tax cut proceeds on stock dividends and buying back their own shares, a move that can boost stock prices.

— deon roberts, charlotteobserver, "Despite tax bill, these Charlotte companies aren’t giving bonuses | Charlotte Observer," 8 Jan. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'stock dividend.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of stock dividend

circa 1902

in the meaning defined at sense 1

See Words from the same year

NEW! Time Traveler

Financial Definition of STOCK DIVIDEND

stock dividend

noun

What It Is

Dividends are a distribution of corporate earnings to shareholders and usually take place in one of two forms -- cash or stock. A stock dividend is the latter of these two kinds of dividends. Each organization's board of directors determines the actual dividend amount that the firm will pay out. Most cash dividends are paid on a quarterly basis, but stock dividends are generally paid at infrequent intervals.

How It Works

When researching a company, it is important to recognize when it pays dividends. However, it is easy to be confused by several different dates a company may specify when informing investors of their dividend structure. You should be aware of the following terms:

Dividend Declaration Date: This is the date on which a company's board of directors declares that a dividend will be paid. The board determines the amount of the dividend, as well as when it is to be paid to shareholders on record.

Dividend Record Date: This is the date on which a company reviews its books to determine its "shareholders of record." Shareholders who hold a particular stock on this date will receive the firm's dividend payment.

Ex-dividend Date: After the Record Date has been determined, the stock exchanges or the National Association of Securities Dealers (NASD) assign the ex-dividend date. The ex-dividend date for stocks is typically two business days prior to the record date. If an investor buys a stock before the ex-dividend date, then he or she will receive the dividend payment. If an investor purchases the stock on or after the ex-dividend date, then he or she is not entitled to receive the dividend. On the ex-dividend date, a firm's share price usually declines to reflect the value of the dividend paid.

Why It Matters

Many investors rely on dividend payments as a source of income. Stock dividends, however, are more like doubling down on an investment. For the company, stock dividends are a way to give something back to shareholders without having to give up cash.

It is important to note that stock dividends often increase the number of shares outstanding. This can have a dramatic effect on calculations that rely on the number of shares outstanding, such as earnings per share.

Dividend payments are very important to the relationship between company and investor. Cuts in dividends can anger shareholders and even tank a stock price.

Source: Investing Answers