Understanding Property Dividends: A Guide for Investors

At some point in your investing career, you may receive a property dividend from a company. Here are the basics of the property dividend and why a company might elect to distribute such dividends.

The Property Dividend

With a property dividend, a company will actually distribute physical property to shareholders instead of sending them a check. This can result in your receiving any number of physical things instead of money. As an investor, you may or may not appreciate getting a piece of property instead of money. For example, if you have a share in an energy drink manufacturer, they might decide to send a case of the energy drink to each shareholder.

Why They Are Issued

A company will not let you know in advance that they plan on issuing property dividends in the future. Typically, they will make the decision of whether to issue a property dividend on a case-by-case basis. A company might be going through tough financial times and decide that they do not have extra profit to distribute. Yet, because they still value the shareholders, they may choose to distribute something that they own instead. This is often done as a sign of goodwill to the investors.