A dividend that is paid for exceptional reasons and is unlikely to be paid again in the foreseen future, if any. It is often a one time payment to shareholders, and historically it was a stand-alone event. However, special dividends are now more related to recapitalization events. A special dividend, in other words, represents an additional distribution that a firm pays if earnings are more than expected in a given period. Many firms pay dividends as a way of distributing some of the extra earnings to investors.
A special dividend is also known as an extra dividend.
