capital dividend

Capital Dividend

A dividend that comes from what an investor has paid into a publicly-traded company, rather than from its earnings. That is, a capital dividend occurs when a company gives back what the investor has invested. It may occur when a company must pay a required dividend but earnings make it unable to do so from its profits. Capital dividends may be a sign that a company is not financially healthy. In any case, they reduce the amount of capital that the company has to invest in its operations. They are also called return of capital.

capital dividend

A dividend considered to be drawn from paid-in capital rather than from current earnings or retained earnings. Capital dividends are generally not taxable to a stockholder when paid; rather, they are used to adjust the basis of the security downward such that a larger capital gain or a smaller capital loss will result at the time the security is sold. A capital dividend is somewhat akin to tearing boards off a house to use as firewood. If the process goes on too long, the house itself will be gone. Also called return of capital.
References in periodicals archive ?
The above net asset value of the capital shares does not include the supplementary capital dividend of 79.
AHT is reporting the distribution of AINC common stock as a return of capital dividend for U.
One benefit of company-owned i lite insurance is that the proceeds increase the company's capital dividend account, which can be paid to shareholders as tax-free capital dividends.
We are confident in our double-digit EPS growth expectations for 2012 and are raising our operating cash expectations to $17-19 billion based upon the restart of the GE Capital dividend.
Equity Cash Net Capital Dividend Income 2011 * $7,954 $450 $459 2010 $7,945 $900 $910 2009 $7,935 $750 $1,111 2008 $7,574 $850 $1571 2007 $6,853 $2,850 $1,856 2006 $7,847 $100 $1,758 2005 $6,189 $400 $1,278 2004 $5,311 $0 $1,007 2003 $4,304 $198 $472 2002 $4,030 $449 $371 2001 $4,108 $382 $604 Total $7,329 $11,397 * June 30.
The non-taxable portion of the capital losses and the $50,000 non-taxable portion of the capital gain would be included in the company's capital dividend account.
The supplementary capital dividend will be paid on 4 January 2016.
One benefit of company-owned life insurance is that the proceeds increase the company's capital dividend account, which can be paid to shareholders as tax-free capital dividends.
This cost of the capital dividend will be funded by cash flows resulting from the excess of our annual depreciation and amortization over capital expenditures.
However, and here is where the importance of planning can be seen, the non-taxable surplus portion of the capital gain will be credited to the capital dividend account (CDA) of the (private) corporation (1) and can then be distributed, tax-free, as a dividend to its shareholders.
Increasing capital in GE Capital to reduce leverage ratios through a reduction in the GE Capital dividend to GE from 40% to 10% of GE Capital's earnings and by suspending the current GE stock buyback.
Similarly, one-half of any capital losses reduces the capital dividend account.

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