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 ?
The 170th consecutive common stock dividend will be paid on 17 September 2019 to shareholders of record as on 3 September 2019.
In July, 2016, Manila Bulletin's Board of Directors and stockholders approved a 3 percent stock dividend amounting to 100,955,507 common shares.
This series C preferred stock dividend will be payable in cash on April 15, 2014, to stockholders of record at the close of business on March 31, 2014.
A quarterly common stock dividend of USD0.73 per share will be paid on 29 June 2012 to common stockholders of record as of the close of business on 15 June 2012.
Based on Mediq's average share price of EUR11.9335 on 17, 18 and 19 August, the stock dividend is valued at EUR0.1501 (USD0.22) per share, almost flat on the cash dividend of EUR0.15 apiece.
MIIF has declared a final stock dividend of Rs 1.25 per unit.
NRG Energy Inc (NYSE:NRG), a US-based energy company, has announced a preferred stock dividend distribution.
This then raises the question: what motivates companies to issue stock dividends, when stock dividends, prima-facie, are of no benefit to the shareholders?
The earnings per incremental share equals the preferred Stock dividends (if deducted from income available to common shareholders in the basic EPS calculation) divided by the number of shares of common stock issued from the assumed conversion.
305(b)(1), because the stock distribution can be a "mere subterfuge for a cash distribution." Moreover, the ruling quotes Tax Court Judge Hamblen's concurring opinion in Frontier, which notes that "[i]f a discretionary act of the board of directors of a shareholder corporation to redeem the stock dividends becomes a routine matter, it might .
The board of directors of Commerce Bancshares Inc (NASDAQ:CBSH) authorised a 5% common stock dividend, with cash being paid in lieu of fractional shares, based on the market value of the stock on the record date, the company declared on Friday.
Global Banking News-October 29, 2018-Commerce Bancshares announces 5% stock dividend and common and preferred stock dividends for quarter