Downtown Merchants has paid a quarterly dividend of $0.60 per share for the past two years.This quarter,the firm plans to pay $0.60 plus an additional $0.05.The firm has stated that it uncertain whether it will pay $0.60 or $0.65 per share next quarter.Which one of the following is the best description of the additional $0.05 that is being paid this quarter?

Question

Quizplus · Accepted Answer

The additional $0.05 being paid this quarter is referred to as an extra dividend. This is different from a special dividend, which is a one-time dividend, and a stock dividend, which involves the issuance of additional shares of stock instead of cash. A liquidating dividend is paid when a company is going out of business or undergoing major restructuring, which is not the case here. Finally, a normal dividend is a regular dividend payment that a company makes on a predefined schedule, whereas this dividend is extra and uncertain to continue.

Downtown Merchants Has Paid a Quarterly Dividend of $0