Legal Definition and Related Resources of Stock Dividend

A stock dividend is stock distributed to those already holding stock by way of dividend upon their then holdings. A mode of distribution of accumulated profits in the shape of new stock instead of cash dividend , by increasing the number of shares held by the stockholders and thereby diminishing the value of each share but leaving the aggregate value of all his stock substantially the same. Stock dividends are one method of capitalizing the accumulated profits of a corporation ; or each surplus may be retained, and kept available for distribution in money or in kind. See Eisner v Macomber, 252 U.S. 189,40 S. Ct. 189, 64 L. Ed. 521.

Payment of a corporate dividend in the form of stock rather than cash. The stock dividend may be additional shares in the company, or it may be shares in a subsidiary being spun off to shareholders. Stock dividends are often used to conserve cash needed to operate the business. Unlike a cash dividend, stock dividends are not taxed until sold.

A dividend paid in securities rather than in cash. The dividend may be additional shares of the issuing company, or in shares of another company (usually a subsidiary) held by the company.

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Stock Dividend in Historical Law

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United States Tax Concept of Stock Dividend

A corporate distribution of additional stock by a company to its shareholders.