A common stock dividend is the
dividend
A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-i ...
paid to
common stock
Common stock is a form of corporate equity ownership, a type of security. The terms voting share and ordinary share are also used frequently outside of the United States. They are known as equity shares or ordinary shares in the UK and other Comm ...
owners from the profits of the company. Like other dividends, the payout is in the form of either cash or stock. The law may regulate the size of the common stock dividend particularly when the payout is a cash distribution tantamount to a
liquidation. Such cash dividends may serve the intent of defrauding
creditors.
Cash dividend
A cash dividend is the distribution of profits to the common stock shareholders, the owners of the corporation. Such distributions are in equal amounts to the shareholders depending on the portion of the company they own.
Stock dividend
A stock dividend to common stock dividend owners distributes additional stock in the company to the common stock shareholders. Such dividends are evenly distributed to the shareholders depending on their portion of ownership in the corporation. Such distributions maintain their proportional ownership in the corporation.
See also
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Common stock
Common stock is a form of corporate equity ownership, a type of security. The terms voting share and ordinary share are also used frequently outside of the United States. They are known as equity shares or ordinary shares in the UK and other Comm ...
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Common stock dividends and DRIP
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Dividend
A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-i ...
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Dividend reinvestment plan
A dividend reinvestment program or dividend reinvestment plan (DRIP) is an equity investment option offered directly from the underlying company. The investor does not receive dividends directly as cash; instead, the investor's dividends are direc ...
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Financial regulation
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Stock split
A stock split or stock divide increases the number of shares in a company. For example, after a 2-for-1 split, each investor will own double the number of shares, and each share will be worth half as much.
A stock split causes a decrease of mark ...
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U.S. Securities and Exchange Commission (SEC)
External links
Securities and Exchange Commission (USA) Corporate law
Dividends
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