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 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.