stock dividend

n.
A dividend paid to stockholders in shares of stock, often used in place of or in addition to a dividend paid in cash.

A dividend payment made in the form of additional shares, rather than a cash payout.

Also known as a "scrip dividend."

Investopedia Says:
Companies may decide to distribute stock to shareholders of record if the company's availability of liquid cash is in short supply. These distributions are generally acknowledged in the form of fractions paid per existing share. An example would be a company issuing a stock dividend of 0.05 shares for each single share held.

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. The dividend is usually expressed as a percentage of the shares held by a shareholder. For instance, a shareholder with 100 shares would receive 5 shares as the result of a 5% stock dividend. From the corporate point of view, stock dividends conserve cash needed to operate the business. From the stockholder point of view, the advantage is that additional stock is not taxed until sold, unlike a cash dividend, which is declarable as income in the year it is received.

This entry contains information applicable to United States law only.

A corporate distribution to shareholders declared out of profits, at the discretion of the directors of the corporation, which is paid in the form of shares of stock, as opposed to money, and increases the number of shares.

When a corporation declares a stock dividend, it adds undivided profits, which cannot be used to pay dividends, to the capital invested in the corporation, to reflect the additional shares it is issuing. The stockholder's increased number of shares represent the same proportion of the value of the company as the stockholder originally held (that is, the stockholder owns the same percentage of the corporation as prior to the declaration of the stock dividend); however, the cash value of an individual share is not reduced.

Shares issued as stock dividends are evidence that additional assets have been added to the capital. The value of the shares of a corporation often, but not always, increases following a stock dividend. A stock dividend is actually a part of corporation bookkeeping.

A stock split is different from a stock dividend in that no adjustment is made to the capital; instead, the number of shares representing the capital increase. The cash value of an individual share, therefore, decreases in proportion to the size of the stock split.