Accumulating Shares

AAA

DEFINITION of 'Accumulating Shares'

Common stock given to current shareholders of a company in place of or in addition to a dividend. By accumulating shares shareholders don't have to pay income tax on these shares; however, it is still mandatory to pay capital gains tax on them. Sometimes companies pay out these shares in addition to dividends paid in cash. These shares are one way companies replace annual income with capital growth. Also referred to as a stock dividend.

INVESTOPEDIA EXPLAINS 'Accumulating Shares'

These types of shares are different from dividends in that dividends are a distribution made to shareholders directly out of company profits and usually paid in cash. In certain situations, these shares can also be paid in the form of property. Stock dividends are paid out to shareholders in the form of shares of stock that increases a stockholders share amount.

RELATED TERMS
  1. Preference Shares

    Company stock with dividends that are paid to shareholders before ...
  2. Shares

    A unit of ownership interest in a corporation or financial asset. ...
  3. Preferred Dividend

    A dividend that is accrued and paid on a company's preferred ...
  4. Common Stock

    A security that represents ownership in a corporation. Holders ...
  5. Paired Shares

    The stock of two separate companies that are under the management ...
  6. Registration Right

    A right which entitles an investor who owns restricted stock ...
Related Articles
  1. The Basics Of Outstanding Shares And ...
    Investing Basics

    The Basics Of Outstanding Shares And ...

  2. Target Prices: The Key To Sound Investing
    Economics

    Target Prices: The Key To Sound Investing

  3. The 5 Types Of Earnings Per Share
    Markets

    The 5 Types Of Earnings Per Share

  4. How Return On Equity Can Help You Find ...
    Economics

    How Return On Equity Can Help You Find ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center