Investing term

What is Stock dividend?

Extra shares distributed to existing holders instead of cash.

A stock dividend pays shareholders in extra shares instead of cash. You end up with more shares, but each is worth proportionally less, so the total value of your holding doesn't change at the moment it's paid. It's a way for a company to reward holders while conserving cash — though it doesn't, by itself, make you any richer.

For example

A 5% stock dividend gives you 5 extra shares for every 100 you hold — more shares, each slightly less valuable, same total worth that day.

Stock 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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