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Financial Terms and Glossary

Special dividend

Special Dividend

A special dividend is a non-recurring distribution of company profits to shareholders, usually paid in addition to the regular dividend. It is typically issued when a company has excess cash and wants to reward shareholders, often after a major event such as the sale of assets or extraordinary profits. Unlike regular dividends, special dividends are not expected to recur on a predictable schedule.

Example

A company sells a significant part of its business and uses the proceeds to issue a special dividend of $5 per share to its shareholders.

Key points

• A one-time, non-recurring payment to shareholders.

• Typically issued after extraordinary profits or major events.

• Provides a return of excess cash to shareholders.

Quick Answers to Curious Questions

They issue special dividends to distribute excess cash to shareholders, often after extraordinary events like asset sales or unusually high profits.

The stock price typically drops by an amount close to the dividend after the ex-dividend date, reflecting the payout.

A special dividend is a one-time payment, whereas regular dividends are periodic and more predictable.

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