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.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
After buying his first stock when McClatchy went public at $18.98 a share in 1989, Walters kept accumulating shares as they soared past $74 in 2005 and watched in horror four years later when they plum meted to less than 50 cents apiece.
The Media General executive said that since last summer, when Harbinger revealed it was accumulating shares in the company, "we have sought repeatedly to talk with Harbinger and learn what is on their mind.
Heinz has touted its own turnaround plan it says was in the works long before Mr Peltz and his partners began accumulating shares earlier this year.