What Is a Property Dividend?

Dividends on property are one of the forms of dividends paid by stock companies to shareholders by using company property other than cash.

Property dividend

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Dividends on property are one of the forms of dividends paid by stock companies to shareholders by using company property other than cash.

Chinese name

Property dividend

Types of

Dividends and bonuses

Object

Listed company

By

Assets other than cash

Definition and classification

It can be the securities of other companies held by listed companies, or it can be physical. Although not prohibited by law, it is rarely used.

There are usually two types of property dividends: One is the dividend on securities. Such securities are mainly stocks, bonds, and bills of other companies held by the company, including government bonds and financial bonds. Generally, securities are used to pay dividends in the following cases: After the company has announced the distribution of dividends, it happens that the company has insufficient cash. As a stopgap measure, the company can convert all kinds of securities held at a certain price to replace The cash was paid to shareholders in order to relieve the urgency. The company needs to adjust the asset structure. When the proportion of securities held by the company is too high and the cash assets are insufficient, the method of paying property dividends can be used to save the cash that should be distributed to shareholders and pay the securities held by the company. In this way, holdings of marketable securities are reduced, and cash assets are increased. Compared with adjusting the asset structure through the financial market, this method does not need to pay transaction costs and also reflects the benefits to shareholders. In order to avoid the suspected monopoly behavior, some holding companies holding a large number of other company's stocks use internal transfers to distribute the stocks of other companies to shareholders as dividends, and they can indirectly maintain control over other companies. Shareholders are also willing to accept the strong variability in the value of stocks and the fact that companies typically distribute below market prices. The other is a physical dividend. Refers to the distribution of dividends to shareholders by the company's physical property. Generally, the company's own products are used as physical dividends or the products exchanged with companies with which it has dealings are used as physical dividends. The distribution of dividends in kind is to expand the sales of the company's products; the second is to keep the cash surplus in the company for production and operation. Sometimes it can be used when the company has a small surplus. When dividends are paid in kind, companies often give shareholders appropriate discounts on prices, which are generally calculated at cost. ^[1]