An issue of shares to an investor in lieu of a cash dividend ( dividends). The value of the shares will be designed to equal the value of the cash dividend foregone. This may be useful for investors who wish to increase their investment in the company without incurring the costs of buying shares in the market. It also benefits the company, which is not required to pay advance corporation tax on a scrip dividend. Many listed companies ( listed company) offer scrip dividend alternatives to the cash dividend. Dresdner Kleinwort Wasserstein financial glossary
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Dividend paid in the form of scrip (temporary certificate) which represents the company's promise to pay a cash dividend. Occurs when earnings are sufficient but issuer wishes to conserve cash holdings. Euroclear Clearing and Settlement glossary
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Where a company distributes dividends in the form of shares. Financial Services Glossary
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An issue of shares available to shareholders that replaces a dividend payment. Shareholders have the option to forgo their dividend for the share alternative. London Stock Exchange Glossary
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scrip dividend UK US noun [C] (also stock dividend) FINANCE, STOCK MARKET
► a payment to a company's shareholders in the form of new shares rather than money: »
The scrip dividend payment may not always be motivated by financial considerations.
Financial and business terms. 2012.