Stock Dividend

(redirected from Accumulating Shares)
Also found in: Dictionary, Thesaurus, Financial.

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 ?
7% premium over Ford's closing stock price on April 2, 2008, the day upon which Tracinda began accumulating shares in the company.
At what price would McWilliams consider accumulating shares of Altera and Xilinx?
Longer-term, fundamental investors may be accumulating shares to take advantage of the low share price resulting from this change over.
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.
Gregory Spear and his team believe it is time to begin accumulating shares of energy companies, beginning with the current dip.