Investing term

What is Special dividend?

A one-off, larger-than-usual cash dividend, often funded by a windfall.

A special dividend is a one-off cash payout, usually larger than the regular dividend, paid when a company has surplus cash — often from selling a business or an unusually strong year. Unlike the regular dividend, it carries no promise of repeating, so it shouldn't be mistaken for a permanent increase in income. It's a one-time return of excess cash to shareholders.

For example

After selling a division, a company pays a $5 special dividend on top of its usual $1 — a windfall, not a new ongoing payout.

Special dividend is taught hands-on in Stage 8 — Corporate Actions: What Lands in Your Account.

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Related terms

AcquisitionOne company buys another. The bought company's shares are converted to cash, acquirer stock, or a mix at the closing price.Carve-outA parent company sells part of a subsidiary in an IPO, keeping a stake.Corporate actionAny event initiated by a company that changes its securities or distributes value to holders.Cost basisWhat you originally paid for a holding, used to calculate gains and losses when you eventually sell.
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