What is a stock dividend?

Question

What is a stock dividend?

Answer 1

A stock dividend can be thought of as a company sharing its profits with their stockholders.  When a company is profitable it may choose to give out some of those profits, in the form of dividends (usually in the form of a check) to qualified stockholders.

Answer 2

Bottom line? free money

Answer 3

distribution of a portion of a corporation's profit to its shareholders in terms of shares instead of cash

Answer 4

I've read all the responses that you received, and they all have discussed cas dividends you received as being share holder BUT there are also dividends that are Stock dividends

A stock dividend is when the company decides to distribute shares of stock in the company to their current shareholder.

So rather than paying a cash dividend, the company can pay you, as share holder, shares of stock.  The dividend is based on how many shares one currently owns.



If you own 100 shares and the company is paying a 5% stock dividend you will receive 5 additional shares of stock

Answer 5

When you buy a stock, you own part of the company.

When the company makes a profit, their board of directors *might* vote to hand over some of that profit to the stock holders.  If they do, they'll send you a cheque (or more stocks, if it is a d.r.i.p. fund).  That's a dividend.

On the other hand, the board might decide to reinvest the profits in more machinery, etc.

Answer 6

A dividend is when a company divides up a portion of the profits and gives it back to the shareholders. The company looks at the amount of profit brought in and the number of shares of stock in the company and then decide on how much of a dividend they will pay. What ever they decide... 20 cents or a dollar or whatever... Ever person that has stock gets that dividend for each share owned.

A person with 100 shares and a dividend of 20 cents... 100 * .2 = 20

That person would get  20 dollars which can be reinvested automatically or spent...

Answer 7

Is your share of the profit on the stock you hold.

Answer 8

Companies  can  share  profits  with  stockholders ,

Like  a  little  bit  ,   like   IBM ,   Intel  or  Home Depot  or

A  Lot   like   PWE ,  PGH  or  BPT

http://finance.yahoo.com/q/cq?d=v1&s=ibm...

Look  at  the  1  year  basic  chart   OR   the  historical  prices  and  select  dividend  only

>

Answer 9

Profitable companies must decide what do with all the money they make.  Growing companies typically reinvest profits into the company to fund expansion.  In some cases, like Proctor and Gamble, the company is already in a mature market, is growwing slowly, and doesn't need the excess cash to finance operations. Or the company is growing but has more cash than it needs to finance growth.

The company has a few options for the extra cash.  It can pay off debt (corporate bond issues).  It can invest the cash (like Warren Buffet at Berkshire Hathaway).  It can buy back stock, increasing the share value.  Or it can distribute cash back to share holders.  The cash distribution can be a one time payment, or it can be a quarterly distribution.  This payment is a dividend.  It is one of the ways a company can return value to shareholders.