Stock Dividend

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Stock Dividend

A corporate distribution to shareholders declared out of profits, at the discretion of the directors of the corporation, which is paid in the form of shares of stock, as opposed to money, and increases the number of shares.

When a corporation declares a stock dividend, it adds undivided profits, which cannot be used to pay dividends, to the capital invested in the corporation, to reflect the additional shares it is issuing. The stockholder's increased number of shares represent the same proportion of the value of the company as the stockholder originally held (that is, the stockholder owns the same percentage of the corporation as prior to the declaration of the stock dividend); however, the cash value of an individual share is not reduced.

Shares issued as stock dividends are evidence that additional assets have been added to the capital. The value of the shares of a corporation often, but not always, increases following a stock dividend. A stock dividend is actually a part of corporation bookkeeping.

A stock split is different from a stock dividend in that no adjustment is made to the capital; instead, the number of shares representing the capital increase. The cash value of an individual share, therefore, decreases in proportion to the size of the stock split.

References in periodicals archive ?
Following that, I wrote a glowing report and suggested accumulating shares at the then current price of about $37.
Astute chairman had, after secretly accumulating shares bought a generation earlier by loyal fans and retained by ignorant widows, floated their clubs for enormous profit,' wrote Bower.
In his State of Tech report on semiconductor fabricators, McWilliams wrote: "I first suggested accumulating shares of TSMC in early 2005 when it was trading in the $7's.
In a report earlier this month analyzing worldwide semiconductor sales data, McWilliams noted that investors should wait patiently for declines in certain key stocks before considering accumulating shares.
7% premium over Ford's closing stock price on April 2, 2008, the day upon which Tracinda began accumulating shares in the company.
We believe the auction price is likely to be higher than the current market level, so by accumulating shares prior to the auction FESCO can save money on the eventual buyout.
At what price would McWilliams consider accumulating shares of Altera and Xilinx?
Crescendo Partners, headed by Eric Rosenfeld, is a New York activist hedge fund that has been accumulating shares in Geac since early March, disclosed a 5% ownership position in the company on Friday, August 12, and last week commenced a proxy contest.