A type of liability dividend that is paid to stockholders in the form of bonds. In this sense, stockholders become also bondholders in the same company. On rate occasions, companies issue fixed-rate bonds or debentures or notes for an extended maturity, and pay them to their stockholders in lieu of immediate dividends. In other words, as in scrip dividends, dividends are not paid immediately in bond dividends; rather a company promises to pay dividends at a future date and to that effect bonds are issued to shareholders in place of cash. The purpose of issuing bonds dividends is postponement of dividend payment after its announcement.
Finance
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