Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
When one owns a stock, the sale of some of the shares to imitate a dividend. One creates a homemade dividend especially when the company represented in the stock does not declare a dividend for a particular period of time. Importantly, a homemade dividend is subject to, at worst, capital gains tax; if the shares are sold at a loss, there may be not taxation at all. This contrasts with a "normal" dividend, which is usually taxed at a higher rate that capital gains.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved