What's a Special Dividend? (And Can You Predict When They'll Come?)
Companies use dividends as a way to distribute some of their profits to shareholders. Ideally, those payouts will be made using cash the company doesn't need for operations, growth or capital investment (though that's not always the case).
Usually, these dividends are handed out on a quarterly or semiannual schedule. In rare situations, however, companies pay special dividends -- one-time extra payments to shareholders.
Sometimes these take place because a company has a triggering event -- perhaps the sale of a division -- or had an unexpectedly profitable period that it does not expect to duplicate. In other cases, a company may choose to pay a special dividend because it's doing well and has built up a stockpile of cash larger than it needs for promoting growth or capital investment.
Source Fool.com
