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 >>
Related Articles
  1. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  2. Stock Analysis

    Boeing Co. Stock: A Dividend Analysis

    Learn about The Boeing Company, its financials and its dividends, which may signal further dividend growth due to its increasing cash flow and earnings.
  3. Stock Analysis

    Walt Disney Stock: A Dividend Analysis

    Learn about the Walt Disney Corporation, its dividend policy, historic dividend yields and the company's dividend prospects going forward.
  4. Stock Analysis

    Schlumberger Stock: A Dividend Analysis

    Examine the strength and potential of major oil service company Schlumberger Ltd. (NYSE: SLB), considered to a solid dividend investment.
  5. Stock Analysis

    Kinder Morgan Stock: A Dividend Analysis

    Learn about Kinder Morgan through an analysis of its dividend policy and dividend yields, and discover how current industry trends affect its dividends.
  6. Stock Analysis

    Johnson & Johnson Stock: A Dividend Analysis

    Explore a detailed analysis of Johnson & Johnson's dividend policy, and learn about the dividend policies of its competitors, Pfizer, Inc. and Merck & Company, Inc.
  7. Stock Analysis

    Home Depot Stock: A Dividend Analysis

    Learn about Home Depot, Inc., its dividend policy, historic dividend yields, overall safety of dividends going forward and the company's financial prospects.
  8. Stock Analysis

    Gilead Sciences Stock: A Dividend Analysis

    Discover analysis of the dividend policy of Gilead Sciences, Inc., and learn about its historical earnings growth and the future of its dividend.
  9. Stock Analysis

    General Electric Stock: A Dividend Analysis

    Read a detailed analysis of the dividend policy of General Electric Company, and explore a comparison of the dividend policies of its competitors.
  10. Stock Analysis

    Chevron Stock: A Dividend Analysis

    Discover a detailed analysis of Chevron's dividend policy, and learn about the dividend policies of its competitors Exxon Mobil and BP.
  1. Record Date

    The cut-off date established by a company in order to determine ...
  2. Dividend Payout Ratio

    The percentage of earnings paid to shareholders in dividends. ...
  3. Dividend

    A distribution of a portion of a company's earnings, decided ...
  4. Target Payout Ratio

    A target payout ratio is a measure of what size a company's dividends ...
  5. Policyholder Dividend Ratio

    The policyholder dividend ratio is a measurement of the profitability ...
  6. Paid-Up Additional Insurance

    Additional whole life insurance that a policyholder purchases ...

You May Also Like

Hot Definitions
  1. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  4. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  5. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  6. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
Trading Center