Income shares are a class of shares in a split capital investment trust. There are several types of income shares, which vary in their entitlements to income and offer various capital entitlements on wind-up.
A share of a split capital investment trust that receives the income received by the underlying investments. Nowadays income shares usually have some right to the capital growth of the fund over its life.
Income shares are typically shares in mature business with fewer opportunities for growth. These companies typically generate a lot of cash and because they have fewer opportunities to invest for growth there is plenty of money available to be returned to shareholders. Tobacco and utilities are good examples of sectors where investors are looking for income rather than growth.
A class of securities issued by dual purpose investment companies that entitles owners to net dividends and interest earned by the company's entire portfolio with a minimum amount guaranteed. (See Capital Shares [Stocks]).
A class of capital stock that is issued by a split investment company or a dual purpose mutual fund. Owners receive dividends and interest generated from the income shares and from capital shares, another class of capital stock. Owners of capital shares receive capital gain generated from both classes. See: Capital Stock; Dividend; Dual Purpose Investment; Mutual Fund
Some Investment Trusts issue more than one type of share. They are called Split Capital Investment Trusts. The simplest 'Split' is divided between capital and income shares. The capital shares receive no dividends over the life of the trust, while the income shares receive all the income generated by the whole fund.
Shares that pay higher than usual, regular dividends.
An Income Shares formula is used by many states to establish the child support amount of each child rather than what it actually costs to raise a child. Income Shares tables calculating child support are not based directly on actual spending on children but rather on indirect estimates of child costs. Income Shares assumes that child costs reflect the spending necessary to restore a family's standard of living back to what it was before prior to the divorce or having a child.
