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. Preferred Dividend

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

    A security that represents ownership in a corporation. Holders ...
  4. Shares

    A unit of ownership interest in a corporation or financial asset. ...
  5. Paired Shares

    The stock of two separate companies that are under the management ...
  6. Enterprise Investment Scheme (EIS)

    A UK program that helps smaller, riskier companies to raise capital ...
RELATED FAQS
  1. What are the main factors that drive share prices in the utilities sector?

    Two of the main drivers in share prices for companies in the utility sector are interest rates and the amount of dividends ... Read Full Answer >>
  2. 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 >>
  3. What dividend yield is typical for the airline sector?

    A dividend yield of 1% is typical for the airline sector. However, many airlines do not pay any dividends at all unlike other ... Read Full Answer >>
  4. How does the risk of investing in the utilities sector compare to the broader market?

    The risk of investing in the utilities sector is less than the broader market. The two main reasons are the high dividends ... Read Full Answer >>
  5. 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 >>
  6. 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 >>
Related Articles
  1. Investing Basics

    The Basics Of Outstanding Shares And The Float

    We go over different types of shares and what investors need to know about them.
  2. Economics

    Target Prices: The Key To Sound Investing

    Learn how to evaluate the legitimacy of target prices and why investors should trust these over ratings.
  3. Markets

    The 5 Types Of Earnings Per Share

    A look at the five varieties of EPS and what each represents can help an investor determine whether a company is a good value, or not.
  4. Economics

    How Return On Equity Can Help You Find Profitable Stocks

    It pays to invest in companies that generate profits more efficiently than their rivals. This is where ROE comes in.
  5. Investing Basics

    Understanding Stock Splits

    We explain what they are, the thinking behind them as well as their results.
  6. Investing

    A Breakdown Of Stock Buybacks

    Find out what these company programs achieve and what it means for stockholders.
  7. Options & Futures

    The "True" Cost Of Stock Options

    Perhaps the real cost of employee stock options is already accounted for in the expense of buyback programs.
  8. Investing Basics

    Understanding Related-Party Transactions

    In business, a related-party transaction refers to a transaction where parties on both sides have a common interest or relationship.
  9. Investing

    Prospering In The Next Bear Market: Here's How

    Prepare to survive, and even prosper, in the impending bear market, by considering and putting into action the following four strategies.
  10. Stock Analysis

    Why Hasn't McDonald's Beaten The Dow Recently?

    McDonald's has underperformed the Dow Industrials since 2009, but a reorganization and buyback could turn things around.

You May Also Like

Hot Definitions
  1. Radner Equilibrium

    A theory suggesting that if economic decision makers have unlimited computational capacity for choice among strategies, then ...
  2. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  3. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  4. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  5. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  6. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!