A stock dividend pays you in extra shares instead of cash. You end up owning more of the company, but since the price adjusts down, your total value stays about the same — more slices of the same pizza.
A stock dividend is a payout made in additional shares rather than money. Declare a 5% stock dividend and a holder of 100 shares receives 5 new ones — no cash leaves the company. It is a way to reward shareholders while keeping cash on the balance sheet, often used by growing firms that prefer to reinvest their profits.
A cash dividend hands you money you can spend or reinvest. A stock dividend hands you shares. You own a bigger slice of the same business, but you cannot spend it until you sell — and the company conserves its cash either way.
A stock dividend resembles a stock split — both add shares without adding value — but a split is usually larger and structured differently. It also echoes the snowball of DRIP reinvesting, where cash dividends buy more shares automatically.
Watch shares compound: collect payouts and toggle DRIP to grow your share count in the dividend investing game.
Not advice: educational content only. For authoritative basics see the SEC at investor.gov.
Related: what are dividends, what is a stock split, and what is dividend yield.
A stock dividend pays shareholders in extra shares instead of cash. If a company declares a 5% stock dividend, you receive 5 more shares for every 100 you own, with no cash changing hands.
A cash dividend pays you money you can spend; a stock dividend pays you new shares. With a stock dividend the company keeps its cash and you simply own more of the same company.
Not by itself. The share price usually adjusts down so your total value is roughly unchanged right after — you own more shares each worth a little less, like cutting a pizza into more slices.
They are similar but not identical. Both increase the share count without adding value, but a split is usually a large change (like 2-for-1) and a stock dividend is a smaller percentage handled through retained earnings.