PGI Energy, Inc. (PGIE)

[bradakus]

Stock Dividends,,,,master plan?..Or is this company just plain Nutty?..

A Stock Dividend is a distribution of corporate earnings paid by the company to its shareholders, as of a specified date, paid via a distribution of the corporation’s stock. Stock Dividends are generally expressed as a percentage of the shareholder’s investment.

For example, a 50% Stock Dividend means that for each share held the investor receives a 50% dividend or ½ share. A 100% Stock Dividend would pay the investor one full share for each share owned. However, typical Stock Dividends on US equity shares do not generally exceed 10%.

A Stock Dividend can be either taxable or non-taxable to the investor. The tax status of a particular stock dividend is dependent on the specific terms of the distribution. The tax on shares received through a taxable Stock Dividend is paid at the time the investor sells the additional shares. This differs from dividends paid in cash which are reportable in the year in which paid.

Similar to cash dividends, upon receipt of the Stock Dividend, the value of the client’s investment is reduced by the market value of the dividend received. The reduction in value results from the disbursement of corporate assets (shares) from the company’s income accounts. After the distribution the company has less assets and, as such, the company is worth less than it was prior to the dividend.

As with cash distributions, the reduction of investment value is also facilitated with a downward adjustment of the company’s share price prior to the open of the next market session.



http://www.brokerage101.com/dividend.html