A stock dividend is a pro rate distribution to stockholders of the corporation’s own stock. Whereas a company pays cash in a cash dividend, a company issues shares of stock in a stock dividend. A stock dividend results in a decrease in retained earnings and an increase in paid in capital. Unlike a cash dividend, a stock dividend does not decrease total stockholders equity or total assets.
Stock dividend is a distribution of shares of the company’s stock or the stock that it owns in other firms.