What is a special dividend?

Special dividends are one -time distribution of assets for shareholders of the company. Special dividend, sometimes known as dividend, differs from regularly planned dividends that investors of course receive. In most cases, the amount of this dividend is greater than the usual dividends issued to investors and occupies only in situations where the company has published an unusually high amount of earnings within a set time frame.

There are other situations other than unexpected high earnings that can lead to a special dividend. If the company wanted to implement drastic changes in the financial structure of the company, further dividends may be published as a way of minimizing and inconvenience that investors could experience during restructuring. For example, if the company wanted to change its structure to focus more on debt -based financing, a good approach would be the release of unexpected dividends.

Similarly, the company may decide to give a single dividend that does not appear as a means of establishing a new subsidiary. This subsidiary can be created by postponing part of the existing business operation or the acquisition of a company that produces products that a parent company needs in the ongoing operation. It is expected that the establishment of a new subsidiary will be beneficial for the company in the long run by reducing operating costs and possible generating additional sales, both factors that have a positive impact on dividends that are paid to investors in the future.

The issue of special dividends is usually considered something extra for shareholders, and not a hint of a permanent increase in future dividends that will be accepted. Generally, the announcement of special dividends explicitly suggests that the dividend issue is a one -time event and that the amount of dividends in no way reflect the amount of future payments to investors.This approach helps to ensure that shareholders do not get a false perception of how the shares are expected to function in the future, or what dividends will continue to bring.

News that the company is supposed to publish a special dividend is often important not only for shareholders, but also for investors in general. One of the positive advantages that the company receives from publishing a special dividend is that attention is alerted to the reason for the payment of this one -off dividend payment. Depending on why the dividend has been published, other investors can investigate the company's plans, see the potential of these plans, and decide to obtain any outstanding shares that are currently trading on the market. This in turn can help increase the unit price for shares shares, an event that the benefits of the company and current shareholders.