Sometimes you may receive additional shares of stock in a company you already own as a dividend instead of receiving a cash dividend. When it is a small percentage, usually less than ten percent, it is often referred to as a stock dividend rather than a stock split. Stock dividends are usually non-taxable. The cost basis accounting for it is done exactly the same way as a stock split, and the stock split calculator can be used.
Some companies which commonly pay stock dividends include: Archer Daniels Midland (ADM) Tootsie Roll (TR)
Recently, quite a few REIT's (real estate investment trusts) have paid dividends in stock in the form of "payment in kind," "payable in kind," or "PIK" dividends. This was done to conserve cash during the credit crisis. These PIK dividends differ from the regular "dividends paid in stock" described above because the PIK dividend is taxable in full when paid. Your cost basis in the additional shares is the amount of your taxable dividend that you did not receive in cash. It is similar to a mandatory dividend reinvestment. The stock split calculator should not be used for PIK dividends.
Examples of companies paying recent PIK dividends are: Simon Property Group (SPG) Vornado Realty Trust (VNO)
Click on the image below to access our free Stock Split Calculator for Stock Dividends
Stock Split Calculator
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Information provided is intended solely for U.S. individual cash-basis taxpayers and is believed to be accurate for most cases. Always consult your personal tax advisor about your own situation. Suggestions are most welcome. Please e-mail webmaster @ costbasis.com or write to us at P O Box 11022, Chicago IL 60611 with your comments.