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. Registered Holder

    Shareholders who hold their shares directly with a company.
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. Fundamental Analysis

    How do I calculate dividend payout ratio from a balance sheet?

    Understand what the dividend payout ratio indicates and learn how it can be calculated using the figures from a company's balance sheet statement.
  9. Options & Futures

    What is the average annual dividend yield of companies in the forest products sector?

    Investing in the forestry sector can provide investors a degree of stability through dividend-paying stocks that are in line with market averages.
  10. Fundamental Analysis

    What is the average annual dividend yield of companies in the oil & gas drilling sector?

    Investing in oil and gas drilling companies can provide income investors a promising addition to dividend-focused portfolios due to higher than average yields.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center