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 ?
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 stock dividend and the quarterly cash dividend have the same record date of Dec.
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Meanwhile, because of the numerous queries from eager PAIM shareholders, Pearl Asian is again providing a clarification on the issuance of stock dividends of Philippines Royal Oil & Alternative Energy Co.
Metropolitan Financial distributed earlier stock dividends of 10 percent in 1985, 1987, 1988, 1989 and 1990, 20 percent in 1991, a three- for-two stock dividend in 1986, and a two-for-one stock dividend in 1992.
The limitations on the amount of excess stock and the issuance of stock dividends both create tax implications that member institutions would likely view as unfavorable.
NASDAQ: RPOW) today announced that its board of directors, at a meeting immediately before its annual meeting, declared a 50 percent stock dividend and a 6 percent increase in its quarterly cash dividend rate to $.
NYSE: FCX) announced today that its Board of Directors has authorized an increase in its annual common stock dividend to $1.
AMEX: GNA) announced today the declaration of a 3-for-2 stock split in the form of a 50 percent stock dividend payable on Sept.
Republic or Company) (NASDAQ:RBCAA), holding company for Republic Bank & Trust Company and Republic Bank & Trust Company of Indiana, declared a five percent (5%) stock dividend to be paid on April 29, 2005 to shareholders of record as of March 25, 2005.