Accounting Dictionary

Stock Dividend

A stock dividend consists of additional shares of stock sent to the current stockholders instead of or in addition to cash dividends.

This is a very confusing term. Companies normally send the owners, the shareholders their share of the profits in the form of dividend checks. People erroneously think these are stock dividends because they are dividends they received because they own stock. But these checks that can be cashed at the bank are CASH dividends. Extra shares of stock are stock dividends.

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