What is a stock dividend?

A stock dividend is a payment to shareholders that consists of additional shares rather than cash. The distributions are paid in fractions per existing share. For example, if a company issues a stock dividend of 5%, it will pay 0.05 shares for every share owned by a shareholder. The owner of 100 shares would get five additional shares.

What are dividends & how do they work?

Dividends are payments a company makes to share profits with its stockholders. They're paid on a regular basis, and they are one of the ways investors earn a return from investing in stocks. Dividends can be paid out in cash, which can be reinvested or withdrawn and used as income, or they can come in the form of additional shares.

What are the different types of dividends?

Cash dividends. The most common type of dividend. Companies generally pay these in cash directly into the shareholder's brokerage account. Stock dividends. Instead of paying cash, companies can also pay investors with additional shares of stock. Dividend reinvestment programs (DRIPs).

What is a special dividend?

Special dividends are like bonuses on top of your dividend paycheck. They're a one-time dividend payment a company may make after a particularly good quarter or if it wants to change its financial structure. These extra dividends tend to be made in cash and are often larger than regular dividend payments. Why Do People Invest in Dividend Stocks?