liability dividend

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Scrip Dividend

An IOU from a publicly-traded company that is short on cash. Such a company pays dividends in scrip until it resolves its liquidity problems.

Stock Dividend

A dividend that is paid in stock or bonds rather than cash. A stock dividend may be declared when the company is cash poor and cannot afford a dividend otherwise. They are generally not considered desirable because one must pay capital gains tax on stock dividends, even though there is no cash gain for the shareholder. It is also called a scrip dividend. See also: Payment-in-kind bond.

liability dividend

A dividend paid with a type of debt, such as a bond. Liability dividends are usually paid when a firm is short of cash. Compare scrip dividend. See also bond dividend.