DIVIDEND

dividend. A portion of a company’s earnings or profits distributed pro rata to its shareholders,

usu. in the form of cash or additional shares. [Cases: Corporations    155(1). C.J.S. Corporations §

300.]

accumulated  dividend.A  dividend  that  has  been  declared  but  not  yet  paid.  —  Also  termed

accrued dividend. [Cases: Corporations    68, 156. C.J.S. Corporations §§ 158, 177, 180–183.]

accumulative dividend.See cumulative dividend.

asset  dividend.A  dividend  paid  in  the  form  of  property,  usu.  the  company’s  product,  rather

than in cash or stock. — Also termed property dividend.

bond dividend.A dividend in which a shareholder receives a bond instead of scrip, property,

or money.

capital-gain dividend.A taxable payment to a mutual-fund shareholder. • The payment is the

shareholder’s  proportional  share  of  the  net  capital  gains  realized  by  securities  sales  from  the

mutual fund’s portfolio. — Also termed capital-gain distribution.

cash  dividend.A  dividend  paid  to  shareholders  in  the  form  of  money.  [Cases:  Corporations

152. C.J.S. Corporations §§ 295–299.]

consent dividend.A dividend that is not actually paid to the shareholders, but is taxed to the

shareholders and increases the basis in their stock investment. • A corporation declares a consent

dividend to avoid or reduce an accumulated-earnings or personal-holding-company penalty tax.

constructive  dividend.A taxable benefit  derived by a shareholder from the corporation even

though  the  benefit  was  not  designated  a  dividend.  •  Examples  include  excessive  compensation,

bargain  purchases  of  corporate  property,  and  shareholder  use  of  corporate  property.  [Cases:

Internal Revenue    3750–3768. C.J.S. Internal Revenue §§ 72, 389–390, 395.]

cumulative dividend.A dividend that grows from year to year when not paid. • A cumulative

dividend is usu. on preferred shares, and it must be paid in full before common shareholders may

receive any dividend. If the corporation does not pay a dividend in a particular year or period, it is

carried over to the next year or period and must be paid before the common shareholders receive

any  payment.  —  Also  termed  accumulative  dividend.  Cf.  noncumulative  dividend.  [Cases:

Corporations    68, 156. C.J.S. Corporations §§ 158, 177, 180–183.]

deferred dividend.A dividend that is declared, but is payable at a future date.

deficiency  dividend.A  dividend  paid  to  reduce or  avoid  personal-holding-company  tax  in  a

prior year.

disguised dividend.See informal dividend.

extraordinary  dividend.A  dividend  paid  in  addition  to  a  regular  dividend,  usu.  because  of

exceptional  corporate  profits  during  the  dividend  period.  —  Also  termed  extra  dividend; D

 

nonrecurring  dividend;  special  dividend.  [Cases:  Corporations    155(1).  C.J.S.  Corporations  §

300.]

fixed-return dividend.A dividend that is constant throughout the investment’s life.

informal dividend.A payment of salary, rent, interest, or the like to or for a shareholder as a

substitute for a dividend. — Also termed disguised dividend.

liability dividend.See scrip dividend.

liquidation dividend.A dividend paid to a dissolving corporation’s shareholders, usu. from the

capital of the  corporation, upon the  decision to suspend  all or part of its business operations. —

Also termed liquidating dividend. [Cases: Corporations    629. C.J.S. Corporations §§ 875–878.]

nimble dividend.A dividend paid out of current earnings when there is a deficit in the account

from which dividends may be paid. • Some state statutes prohibit nimble dividends.

noncumulative  dividend.A  dividend  that  does  not  accrue  for  the  benefit  of  a  preferred

shareholder if there is a  passed  dividend in a particular year or  period.  Cf.  cumulative  dividend.

[Cases: Corporations    152. C.J.S. Corporations §§ 295–299.]

nonrecurring dividend.See extraordinary dividend.

passed  dividend.A  dividend  that  is  not  paid  when  due  by  a  company  that  has  a  history  of

paying regular dividends.

preferred dividend.A dividend paid to preferred shareholders, who are generally paid a fixed

amount  and  take  priority  over  common  shareholders.  [Cases:  Corporations    151,  156.  C.J.S.

Corporations §§ 158, 293.]

property dividend.See asset dividend.

reinvested dividend.A dividend that is used to purchase additional shares in the corporation,

instead of being taken in cash by the shareholder. See DIVIDEND-REINVESTMENT PLAN.

scrip  dividend.A  dividend  paid  in  certificates  entitling  the  holder  to  ownership  of  capital

stock  to  be  issued  in  the  future.  •  This type  of  dividend  usu.  signals  that  the  corporation’s  cash

flow is poor. — Also termed liability dividend.

special dividend.See extraordinary dividend.

stock  dividend.A  dividend  paid  in stock expressed as a  percentage  of the  number of shares

already held by a shareholder. [Cases: Corporations    157. C.J.S. Corporations §§ 294, 302–304.]

unpaid dividend.A declared but unpaid dividend.

year-end  dividend.An  extra  dividend  paid  at  the  end  of  the  fiscal  year  depending  on  the

amount of the profits. [Blacks Law 8th]