Definition of liquidating dividend


14-Jul-2020 10:06

(See also Stock dilution.) Stock dividend distributions do not affect the market capitalization of a company.

Stock dividends are not includable in the gross income of the shareholder for US income tax purposes.

This declared dividend usually accompanies the company's interim financial statements. Financial assets with a known market value can be distributed as dividends; warrants are sometimes distributed in this way.

For large companies with subsidiaries, dividends can take the form of shares in a subsidiary company.

Dividends can provide stable income and raise morale among shareholders.

For the joint-stock company, paying dividends is not an expense; rather, it is the division of after-tax profits among shareholders.

This is an important date for any company that has many stockholders, including those that trade on exchanges, to enable reconciliation of who is entitled to be paid the dividend.

Existing holders of the stock will receive the dividend even if they sell the stock on or after that date, whereas anyone who bought the stock will not receive the dividend.

Property dividends or dividends in specie (Latin for "in kind") are those paid out in the form of assets from the issuing corporation or another corporation, such as a subsidiary corporation.

Thus, if a person owns 100 shares and the cash dividend is 50 cents per share, the holder of the stock will be paid .