What does “100% stock dividend” mean?
"A 100% stock dividend means that you get one share of the ""stock dividend"" for every share you own. For example, Google did this in 2014 when they gave all of their Class A shareholders one class C share for every Class A that they owned. If the 100% stock dividend is for the exactly the same stock, it is basically the same as a 2-for-1 stock split. If, however, the 100% stock dividend is to give you a different stock, then this is typically due to a corporate reorganization or demerger/spinoff event. Some countries have different tax treatments for the events - for example, with demergers in Australia, Class Rulings need to be obtained from the Australian Taxation Office to declare demergers as tax free.  A recent demerger was in Australia as South32, demerged from BHP Billiton. References: http://economix.blogs.nytimes.com/2014/04/02/the-many-classes-of-google-stock/ http://www.bhpbilliton.com/investors/shareholderinfo/demerger-taxation-information" Simply put, 100% stock dividend is 1:1 or 1 for 1 bonus share, as explained above, if you held 100 shares after 1:1 bonus you would have 200 shares (100 original, another 100 as bonus). The impact on the stock price is that the price becomes 1/2 the price of the stock before bonus (supply has doubled). 1:1 bonus is nor exactly like a 2:1 / 2 for 1 stock split, in a split the face value if the share would also go down. In effect, any bonus share is not of any fundamental value to the shareholder, as the companies usually capitalize reserves from previous year/years this way as the value of the company does not change fundamentally. In effect the company is taking your money and giving you shares instead.
"There are a few reason why the stock price decreases after a dividend is paid:  What's the point of paying a dividend if the stock price automatically decreases? Don't the shareholders just break even? Companies have to do something with their profits. They beholden to their shareholders to make them money either by increasing the share value or paying dividends. So they have the choice between reinvesting their profits into the company to grow the business or just handing the profits directly to the owners of the business (the shareholders). Some companies are as big as they want to be and investing their profits into more capital offers them diminishing returns. These companies are more likely to pay dividends to their shareholders. I assume the price of the stock ""naturally"" increases over the year to reflect the amount of the dividend payment. This is kind of a vague question but then doesn't it make it difficult to evaluate the fluctuations in stock price (in the way that you would a company that doesn't pay a dividend)? It depends on the company. The price may recover the dividend drop... could take a few days to a week. And that dependings on the company's performance and the overall market performance.  With respect to options, I assume nothing special happens? So say I bought $9 call options yesterday that were in the money, all of a sudden they're just not? Is this typically priced into the option price? Is there anything else I need to know about buying options in companies that pay dividends? What if I had an in-the-money option, and all of a sudden out of nowhere a company decides to pay a dividend for the first time. Am I just screwed? One key is that dividends are announced in advance (typically at least, if not always; not sure if it's required by law but I wouldn't be surprised). This is one reason people will sometimes exercise a call option early, because they want to get the actual stock in order to earn the dividend. For ""out of the ordinary"" large cash dividends (over 10% is the guideline), stock splits, or other situations an option can be adjusted: http://www.888options.com/help/faq/splits.jsp#3 If you have an options account, they probably sent you a ""Characteristics and Risks of Standardized Options"" booklet. It has a section discussing this topic and the details of what kinds of situations trigger an adjustment. A regular pre-announced <10% dividend does not, while a special large dividend would, is what I roughly get from it. That ""Characteristics and Risks of Standardized Options"" is worth reading by the way; it's long and complicated, but well, options are complicated. Finally, do all companies reduce their stock price when they pay a dividend? Are they required to? I'm just shocked I've never heard of this before. The company doesn't directly control the stock price, but I do believe this is automatic. I think the market does this automatically because if they didn't, there would be enough people trying to do dividend capture arbitrage that it would ultimately drive down the price." You are misunderstanding what makes the price of a stock go up and down. Every time you sell a share of a stock, there is someone else that buys the stock.  So it is not accurate to say that stock prices go down when large amounts of the stock are sold, and up when large amounts of the stock are bought.  Every day, the amount of shares of a stock that are bought and sold are equal to each other, because in order to sell a share of stock, someone has to buy it. Let me try to explain what actually happens to the price of a stock when you want to sell it. Let's say that a particular stock is listed on the ticker at $100 a share currently.  All this means is that the last transaction that took place was for $100; someone sold their share to a buyer for $100. Now let's say that you have a share of the stock you'd like to sell.  You are hoping to get $100 for your share.  There are 2 other people that also have a share that they want to sell.  However, there is only 1 person that wants to buy a share of stock, and he only wants to pay $99 for a share.  If none of you wants to sell lower than $100, then no shares get sold.  But if one of you agrees to sell at $99, then the sale takes place.  The ticker value of the stock is now $99 instead of $100. Now let's say that there are 3 new people that have decided they want to buy a share of the stock.  They'd like to buy at $99, but you and the other person left with a share want to sell at $100.  Either one of the sellers will come down to $99 or one of the buyers will go up to $100.  This process will continue until everyone that wants to sell a share has sold, and everyone who wants to buy a share has bought.  In general, though, when there are more people that want to sell than buy, the price goes down, and when there are more people that want to buy than sell, the price goes up. To answer your question, if your selling of the stock had caused the price to go down, it means that you would have gotten less money for your stock than if it had not gone down.  Likewise, if your buying the stock had caused it to go up, it just means that it would have cost you more to buy the stock.  It is just as likely that you would lose money doing this, rather than gain money. "As I understand it, a company raises money by sharing parts of it (""ownership"") to people who buy stocks from it.  It's not ""ownership"" in quotes, it's ownership in a non-ironic way.  You own part of the company.  If the company has 100 million shares outstanding you own 1/100,000,000th of it per share, it's small but you're an owner.  In most cases you also get to vote on company issues as a shareholder. (though non-voting shares are becoming a thing).  After the initial share offer, you're not buying your shares from the company, you're buying your shares from an owner of the company.  The company doesn't control the price of the shares or the shares themselves. I get that some stocks pay dividends, and that as these change the price of the stock may change accordingly. The company pays a dividend, not the stock.  The company is distributing earnings to it's owners your proportion of the earnings are equal to your proportion of ownership.  If you own a single share in the company referenced above you would get $1 in the case of a $100,000,000 dividend (1/100,000,000th of the dividend for your 1/100,000,000th ownership stake). I don't get why the price otherwise goes up or down (why demand changes) with earnings, and speculation on earnings.  Companies are generally valued based on what they will be worth in the future.   What do the prospects look like for this industry?  A company that only makes typewriters probably became less valuable as computers became more prolific.  Was a new law just passed that would hurt our ability to operate?  Did a new competitor enter the industry to force us to change prices in order to stay competitive?  If we have to charge less for our product, it stands to reason our earnings in the future will be similarly reduced.   So what if the company's making more money now than it did when I bought the share? Presumably the company would then be more valuable. None of that is filtered my way as a ""part owner"".  Yes it is, as a dividend; or in the case of a company not paying a dividend you're rewarded by an appreciating value. Why should the value of the shares change? A multitude of reasons generally revolving around the company's ability to profit in the future." Any ETF has expenses, including fees, and those are taken out of the assets of the fund as spelled out in the prospectus.  Typically a fund has dividend income from its holdings, and it deducts the expenses from the that income, and only the net dividend is passed through to the ETF holder.   In the case of QQQ, it certainly will have dividend income as it approximates a large stock index.  The prospectus shows that it will adjust daily the reported Net Asset Value (NAV) to reflect accrued expenses, and the cash to pay them will come from the dividend cash.  (If the dividend does not cover the expenses, the NAV will decline away from the modeled index.) Note that the NAV is not the ETF price found on the exchange, but is the underlying value.  The price tends to track the NAV fairly closely, both because investors don't want to overpay for an ETF or get less than it is worth, and also because large institutions may buy or redeem a large block of shares (to profit) when the price is out of line.  This will bring the price closer to that of the underlying asset (e.g. the NASDAQ 100 for QQQ) which is reflected by the NAV. Sources such as Value Line, or S&P stock reports will show you dividend payout ratios (the American usage. These are the inverse of dividend cover ratios, with dividends being in the numerator, and earnings in the denominator. For instance, if the dividend cover ratio is 2, the dividend payout ratio is 1/2= 50%. Dividend prices are per share, so the amount that you get for a dividend is determined by the number of shares that you own and the amount of the dividend per share. That's all. People like to look at dividend yield because it lets them compare different investments; that's done by dividing the dividend by the value of the stock, however determined. That's the percentage that the question mentions. A dividend of $1 per share when the share price is $10 gives a 10% dividend yield. A dividend of $2 per share when the share price is $40 gives a 5% dividend yield. If you're choosing an investment, the dividend yield gives you more information than the amount of the dividend. There are not necessarily large shareholders, maybe every other Joe Schmoe owns 3 or 5 shares; and many shares might be inside investment funds. If you are looking for voting rights, typically, the banks/investment companies that host the accounts of the individual shareholders/fund owners have the collective voting rights, so the Fidelity's and Vanguard's of the world will be the main and deciding voters. That is very common. "A ""covenant"" is a solemn promise to engage in or refrain from a specified action. Every company must do a balancing act while declaring the dividends in terms of companies interest (can it use the surplus cash to generate more revenue) to shareholders' interests, giving back to them the profits that due. Many countries have regulations governing as to when and how much the dividends may be given. It also lays out the policy about declaring dividends to protect everyones' interest. For example if the company has a huge suit pending against it, the company is not supposed to distribute the surplus cash as dividends and when the suit goes against it, its left when no money to pay ... or other such examples where the interests of one or the other party is compromised. The company law board ensures that all this is adhered to in a fair manner. So essentially ""these covenants include provisions about passing dividends"", means that due diligence has be exercised by the company in order to arrive at the dividends that are to be paid out."