Scrip dividend

A scrip dividend is new shares of an issuer's stock that are issued to shareholders instead of a dividend. Scrip dividends may be used when issuers have too little cash available to issue a cash dividend, but still want to pay their shareholders in some manner. Scrip dividends may also be offered to shareholders as an alternative to a cash dividend, so that their dividend payments are automatically rolled into more shares. The advantage for shareholders is that they do not have to pay any transaction fees, such as commissions, when acquiring new shares. This is also a modest way for the issuer of stock to save money by not paying cash dividends.

Related Courses

Corporate Finance 
Treasurer's Guidebook