Definitions for "Scrip dividend"
Keywords:  dividend, lieu, opt, shareholders, cash
An issue of shares available to shareholders that replaces a dividend payment. Shareholders have the option to forgo their dividend for the share alternative.
This is a method by which a company offers shareholders a way of taking dividends in the form of company shares. In a Scrip scheme, the cash dividend is not paid to those holders opting to receive shares. Instead, shares are allotted to participating holders and share certificates sent to them on the payment date. If the amount of the dividend is not divisible exactly by the share price and there is a fraction of a share left over, this is added to the next dividend or given to charity depending on the terms of the scheme. The scrip scheme involves the issue of new shares to fulfil the dividend payments. Xansa currently offers shareholders a scrip dividend option.
Instead of paying a dividend out in cash, some companies will issue with new shares of the same value instead. This is known as a scrip dividend.