What is a “special dividend” and what does it do?

Question

My friend has some stock and they keep telling me about the special dividends they’re getting in a means to tempt me to get some stock too.

I’ve tried reading up on it, but I can’t understand what it’s saying lol

Thanks!

In: 1

Answer 1

Dividends are generally paid on a schedule, like say quarterly or yearly. Many stocks will have a quarterly dividend they pay

A special dividend is something out of the ordinary schedule, or a dividend paying from a stock that does not usually do dividends or some usually large or different amount . Its a special “one-time” dividend that is out of the norm in some way

However, dividends are not really important to retail investors, they are really only important for large shareholders, institutional shareholders, and insiders.

Answer 2

Dividends are most commonly quarterly payments to shareholders from company profits. 1-3% of stock price per year is typical, paid out quarterly… but sometimes companies issue special dividends, which are one-time typically larger dividend payments. This may be done for various reasons, like proceeds from selling off part of the company, upcoming changes in tax laws, just a gigantic pile of cash.