Question

Mansfield and Jones generally pay a quarterly dividend of $1.10 per share. Occasionally, after a financially good year, the firm will increase the dividend by $1 for one year. What type of dividend is this additional $1?

Answer 1

The additional $1 dividend paid by Mansfield and Jones after a good financial year is a special dividend, which is a one-time payment not guaranteed to be repeated.

Step-by-step explanation:

The additional $1 dividend that Mansfield and Jones pays out after a financially good year is known as a special dividend. This is a one-time distribution to shareholders that is separate from the regular recurring dividends the firm pays, which in this case is $1.10 per share quarterly.

Special dividends are typically issued after an exceptionally profitable period and are not guaranteed to occur in the future, distinguishing them from the expected periodic dividends.