Capital Dividend

Filed Under » , ,
Dictionary Says

Definition of 'Capital Dividend'

A type of payment by a firm to its investors that is drawn from a company's paid-in-capital or shareholders' equity, rather than from the company's earnings, as with regular dividends. Such a dividend is often paid out in instances where a dividend payment is required, but company earnings cannot facilitate such a cash payment.

Also known as a "return of capital".

Investopedia Says

Investopedia explains 'Capital Dividend'

A capital dividend is typically not taxable for shareholders, as it is viewed as a return of the capital paid in by investors. Capital dividends are not a preferred form of dividend payment for firms or investors, as they are often seen as a sign of a company struggling to generate earnings and free cash flow. Additionally, by paying out dividends from retained earnings, a company's struggles may worsen as its capital base shrinks, limiting investment and business opportunities in the future.

Articles Of Interest

  1.

    Why Dividends Matter

    Seven words that are music to investors' ears? "The dividend check is in the mail."

  2. Your Dividend Payout: Can You Count On It?

    We go over several telling factors that can help you answer this question and avoid losses.

  3. How Dividends Work For Investors

    Find out how a company can put its profits directly into your hands.

  4. How And Why Do Companies Pay Dividends?

    Explore arguments for and against company dividend policy, and learn how companies determine how much to pay out.

  5. Breaking Down The TSP Investment Funds

    For investors seeking growth, income AND capital preservation, the Thrift Savings Plan offered by the U.S. government is a great option to consider. In this article, we examine the five core ...

  6. Analyzing The Best Retirement Plans And Investment Options

    Understanding the various retirement investments - from annuities to 401(k)s and everything in between - is crucial to reaching your retirement goals. Here, we examined many of the popular investments ...

  7. Earnings Guidance: Can It Accurately Predict The Future?

    Explore the controversies surrounding companies commenting on their forward-looking expectations.

  8. Mergers And Acquisitions: Understanding Takeovers

    In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game.

  9. Look Towards Small-Caps For Big Dividends

    Small-caps can be a fruitful place to gain high yields.

  10. Finding Bond-Like Income With Utilities

    The traditional utility sector has become a happy hunting ground for income seekers.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Yield Elbow

    The point on the yield curve indicating the year in which the economy's highest interest rates occur. The yield elbow is the peak of the yield curve, signifying where the highest interest rates occurred.

  2. Xenocurrency

    A currency that trades in markets outside of its domestic borders.

  3. Wanton Disregard

    A standard of severe negligence. Wanton disregard is a very serious accusation that indicates that a person behaved extremely recklessly.

  4. Ultra ETF

    A class of exchange-traded funds (ETF) that employs leverage in an effort to achieve double the return of a set benchmark.

  5. Toehold Purchase

    A purchase of less than 5% of a target company's outstanding stockmade by an acquiring company. A toehold purchase of just under 5%, while not a significant stake in a firm, allows the shareholders a "toe-holds" grip on the company and its decision making.

  6. Samurai Bond

    A yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.
Trading Center
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=d18fecbe247e9d1dbcade8d5e68b49e1