stock dividend

Thân thiện

A company issues a stock dividend to its shareholders.

Definition

1. Noun:
   • A dividend paid in stock rather than in cash: A "stock dividend" is a corporate distribution of additional shares of a company's own stock to its shareholders, instead of a cash payment. It increases the number of shares owned while maintaining the same proportional ownership in the company.

Usage

• A "stock dividend" is issued by a corporation from its retained earnings. It does not reduce the company's cash reserves. For the shareholder, the total value of their investment typically remains the same immediately after the dividend is issued, as the price per share usually adjusts downward proportionally.

Examples

• Noun:
  • The company announced a 5% stock dividend, so for every 20 shares you own, you will receive one additional share.
  • Instead of depleting cash, the board opted to issue a stock dividend to reward shareholders.

Advanced Usage

• "Stock dividend vs. stock split": While both increase the number of shares outstanding, a stock dividend is accounted for by transferring value from retained earnings to paid-in capital, whereas a stock split merely divides existing shares into more shares without changing the underlying equity accounts.
  • The 50% stock dividend required a journal entry to capitalize retained earnings, unlike a 2-for-1 stock split.

Variants and Related Words

• Scrip dividend (n): A type of dividend promising a future cash payment or the issuance of shares at a later date, sometimes used similarly to a stock dividend.
• Bonus issue (n): A term used primarily in British English synonymous with a stock dividend.
  • The bonus issue increased the number of shares in circulation.

Synonyms

• Share dividend: A direct synonym, commonly used in various English-speaking regions.
• Capitalization of earnings: A broader financial term describing the process of converting retained earnings into capital, which is the accounting essence of a stock dividend.

Related Phrases

• To issue a stock dividend: The action of a company distributing shares as a dividend.
  • The firm decided to issue a stock dividend to conserve cash for expansion.
• To receive a stock dividend: The action of a shareholder getting additional shares.
  • As a long-term investor, I prefer to receive a stock dividend.

Học thuật

Noun

1. a dividend paid in stock rather than in cash