Cutting A Melon

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DEFINITION of 'Cutting A Melon'

A slang term used to describe when a board of directors declares an additional dividend in addition to the regular distribution. The additional dividend can be in the form of cash, stock or property.

INVESTOPEDIA EXPLAINS 'Cutting A Melon'

The board of directors (BOD) is responsible for deciding how it will share the company's earnings with shareholders in the form of dividends. In most cases, dividends are issued in accordance to a set policy and are paid on preset schedule, such as annually or quarterly.

The BOD is cutting a melon when the company has earned additional income, this is the melon and distributes a portion of it to shareholders. The bigger the melon, the sweeter it tastes to investors!

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    Whether a dividend distribution has any effect on additional paid-in capital depends solely on what type of dividend is issued: ... Read Full Answer >>
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  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 >>
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