Liquidating Dividend

In general, a dividend pays a certain cash amount to shareholders. If you own 100 shares of Pay It Forward Inc. and the firm issued a $0.50 per share dividend, you would get a check for $50. It’s a way to distribute part of a company’s profits to shareholders.

A liquidating dividend takes this concept to the extreme. The goal is to distribute everything to shareholders. A company is going to go out of business, so it dissolves by handing out its full value to its shareholders via a one-time dividend. Liquidation via dividend.