A special dividend is a payment made by a company to its
shareholders that is separate from the typical recurring dividendcycle, if any, for the company. The difference may be the result of the date of issue, the amount, the type of payment, or a combination of these factors.
The amount of the dividend is declared special or significant in relation to the stock price. For this reason, the
ex-dividend dateis set one stock trading day after the payment date. The stock will trade on an ex-distribution basis, adjusted for the amount of the dividend paid one trading day after the payment date. The determining factor for a special or significant dividend is usually when the dividend is 20% or greater in relation to the underlying price of the stock/security.
To be entitled to a special dividend, you need to be a stockholder on the record date. To be a stockholder on the record date, your purchase would have needed to be made a minimum of three stock trading days prior to the date of record or record date.
In the case of special or significant dividends, the stock trades without the dividend from the record date, through the Payment Date, then adjust for the dividend paid and starts trading on an ex-distribution basis one stock trading day after the Payment Date. To be entitled to receive the dividend, it is required that you be a stockholder on the record date and hold your stock thru the payment date in order to receive the dividend. When a special or significant dividend is being paid selling your stock between the record date and payment date relinquishes your right to the dividend.
The earliest you can sell your stock and still be entitled to the special dividend is one day after the payment date, or the date the stock begins trading on an ex-distribution basis.
A prominent example of a special dividend was the $3 dividend announced by
Microsoftin 2004 to partially relieve its balance sheet of a large cash balance. [cite web
title = Microsoft Outlines Quarterly Dividend, Four-Year Stock Buyback Plan, And Special Dividend to Shareholders
work = PressPass - Information for Journalists
publisher = Microsoft
date = July 24, 2005
url = http://www.microsoft.com/presspass/press/2004/jul04/07-20boardPR.mspx
accessdate = 2006-11-09 ]
Dividend reinvestment planor DRIP
* [http://www.dividendinvestor.com/ US, UK and Canadian Free Special Dividend Stock Research Center]
* [http://dividendinformation.com Dividend Information] A searchable database of dividend payouts and history for all stocks.
Wikimedia Foundation. 2010.
Look at other dictionaries:
special dividend — A large, usually one off, dividend, outside the normal pattern of a company s dividend payments. They have commonly been used to return surplus cash to shareholders; to fund a takeover bid; to fend off a hostile takeover bid or; when combined… … Law dictionary
Special dividend — Also referred to as an extra dividend. Dividend that is unlikely to be repeated. The New York Times Financial Glossary * * * special dividend special dividend ➔ dividend * * * special dividend UK US noun [C or U] FINANCE ► part of the profit of a … Financial and business terms
special dividend — Also referred to as an extra dividend. dividend that is unlikely to be repeated. Bloomberg Financial Dictionary * * * special dividend special dividend ➔ dividend * * * special dividend UK US noun [C or U] FINANCE ► part of the profit of a… … Financial and business terms
Special Dividend — A non recurring distribution of company assets, usually in the form of cash, to shareholders. A special dividend is larger compared to normal dividends paid out by the company. Also referred to as an extra dividend . Generally, special dividends… … Investment dictionary
special dividend — noun : a dividend that typically results from some windfall profit to a company and is not ordinarily expected to be repeated * * * a dividend paid to stockholders in addition to the regular dividend. Also called extra dividend … Useful english dictionary
special dividend — a dividend paid to stockholders in addition to the regular dividend. Also called extra dividend. * * * … Universalium
special dividend — extra dividend A single irregular dividend payment. It is usually made after an especially profitable year but is sometimes associated with the restructuring of companies … Accounting dictionary
special dividend — extra dividend A single irregular dividend payment. It is usually made after an especially profitable year but is sometimes associated with the restructuring of companies … Big dictionary of business and management
Dividend payout ratio — is the fraction of net income a firm pays to its stockholders in dividends: The part of the earnings not paid to investors is left for investment to provide for future earnings growth. Investors seeking high current income and limited capital… … Wikipedia
dividend share — UK US noun [C] UK (US dividend stock) ► STOCK MARKET a share that has been bought using a dividend, or that is given instead of a dividend: »Shareholders will receive 19 new ordinary shares plus one special dividend share for every 20 ordinary… … Financial and business terms