liquidating dividend

Liquidating dividend

Payment by a firm to its owners from capital rather than from earnings.

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Liquidating Dividend

A dividend paid to shareholders out of a company's capital or assets, rather than its earned income. That is, a liquidating dividend occurs when a company pays more than its total profit in dividends. This usually happens when shareholders believe that the company is no longer sustainable or profitable. Therefore, liquidating dividends are considered a return of shareholders' investments, rather than profit on them. All of the firm's debts must be paid before it can pay liquidating dividends. See also: Final dividend.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

liquidating dividend

A pro rata distribution of cash or property to stockholders as part of the dissolution of a business. For example, a firm may be liquidated because the officers believe its stock price does not adequately reflect the value of its assets. All debts and other obligations usually must be satisfied before issuance of a final liquidating dividend. A stock paying a liquidating dividend is indicated in stock transaction tables in newspapers by the symbol C, next to the dividend column. See also final dividend, General Utilities Doctrine.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.