When dividend is paid out of profit it is called “profit dividend” and when it is paid out of capital it is called “liquidation”. Usually there are 4 forms of dividend.
a) Cash dividend: it is the common method to pay the dividend. Here the shareholders get cash in form of dividend but for this purpose the company must have adequate liquid resources.
b) Scrip or bond dividend: it is the promise made by the company to the shareholders to pay them at future specific date. This form of payment is generally used in case the company doesn’t have sufficient money.
c) Stock dividend: here the company issue bonus share to the existing shareholders. This form of payment is also used in case the company doesn’t have sufficient money.
d) Property dividend: it means payment made to the shareholders in form of property rather than cash.
These are the 4 forms of dividend.