In finance, the word "melon" is typically used to refer to a company's earnings. "Cutting a melon", therefore, is a term used to describe a situation in which a company's managers declare a large cash dividend or extra stock equity. Usually, management shares a company's earnings by issuing dividend payments. It is up to the company's board of directors to determine how company earnings will be shared with investors in the form of dividends, but this is often done according to a preset policy and on a specific time line. When a company's earnings grow, or the melon gets bigger, it might issue extra stock or special dividends in addition to regular dividends. In other words, the company cuts the melon and shares it with investors.

For more on a company's distributions, check out Dividend Facts You May Not Know.

  1. How do dividend distributions affect additional paid in capital?

    Whether a dividend distribution has any effect on additional paid-in capital depends solely on what type of dividend is issued: ... Read Full Answer >>
  2. What is the average annual dividend yield of companies in the retail sector?

    According to data published by the NYU Leonard N. Stern School of Business, as of January 2015, the average annual dividend ... Read Full Answer >>
  3. Which retail stocks pay the highest dividends?

    The retail sector consists of diverse groups of companies that specialize in pure online retail sales, brick-and-mortar retail ... Read Full Answer >>
  4. How can the price of a stock change on the ex-dividend date?

    An investor looking for a dividend-paying stock has two important dates to consider when investing in a company. The first ... Read Full Answer >>
  5. How is the ex-dividend date for a dividend on a stock determined?

    The ex-dividend date is actually determined by the appropriate stock exchange, not by the company paying the dividend. The ... Read Full Answer >>
  6. What is the average annual dividend yield of companies in the automotive sector?

    As of May 2015, using trailing 12-month data, the annual dividend yields of industries in the automotive sector are 1.01% ... Read Full Answer >>
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  2. Dividend Payout Ratio

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  3. Dividend

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  4. Target Payout Ratio

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  5. Policyholder Dividend Ratio

    The policyholder dividend ratio is a measurement of the profitability ...
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