Stock dividends can play an important role in providing regular income for investors seeking higher-than-average yield. While there is no guarantee that a company will pay dividends, we look for companies with a strong historical payout and increasing future dividend rates. Investors can also reinvest dividends into the underlying stock to acquire additional shares. A stock dividend is a dividend payment made in the form of additional shares rather than a cash payout. Companies may decide to distribute this type of dividend to shareholders of record if the company’s availability of liquid cash is in short supply. These distributions are generally acknowledged in the form of fractions paid per existing share, such as if a company issued a stock dividend of 0.05 shares for each single share held by existing shareholders.