Cash-And-Stock Dividend

Filed Under: ,
Dictionary Says

Definition of 'Cash-And-Stock Dividend'


A corporation distributing earnings to its shareholders as both cash and stock as part of the same dividend. In other words, a corporation declares that as of a certain date all shareholders will receive both a cash payment and additional shares of stock in that corporation at a specific point in the future. The cash portion of the dividend is expressed in cents or dollars per share owned. The stock portion is typically expressed as a percentage of the number of shares owned.



Investopedia Says

Investopedia explains 'Cash-And-Stock Dividend'


For example, a shareholder owns 100 shares of XYZ Corporation. The company declares a stock-and-cash dividend of 25 cents per share, plus 10% of the shares owned. For the shareholder, this would result in a $25 cash dividend (25 cents per share multiplied by 100 shares) and 10 additional shares of stock (100 shares owned multiplied by a 10% stock dividend rate).

There are many reasons why a company might choose to issue a cash-and-stock dividend.
Some companies believe that their shareholders respond better to one type of dividend versus another. By using a cash-and-stock dividend, shareholders may feel as if they are getting a better deal than just receiving more of either one by itself.

On a more practical side, stock dividends are typically not taxable to shareholders when received (although many exceptions exist), whereas cash dividends are. By distributing a portion of the dividend in stock, the corporation is potentially helping to minimize the tax effects for shareholders receiving the dividend. Additionally, a partial stock dividend helps a company conserve some of its cash, which can then be utilized to stabilize or grow the company.

Related Video for 'Cash-And-Stock Dividend'

comments powered by Disqus
Hot Definitions
  1. Private Equity

    Equity capital that is not quoted on a public exchange. Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity.
  2. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  3. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  4. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  5. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  6. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
Trading Center