Dividend stripping

By:
Updated: Aug 20, 2021

When a company has accumulated considerable reserves either of a capital or of a general nature, a financier or a person with sufficient resources may buy a controlling interest in this company, to sell its assets, particularly its property (this may be rented back), and obtain sufficient funds to distribute the reserves by way of dividends (being mostly to himself). The stripper may then sell his shares and go. It is a practice rather frowned upon by those who do not have the resources to do the same, by the Stock Exchange and by the Chancellor. A serious objection is that it could leave the company in a difficult position or even facing insolvency.

Reference: The Penguin Business Dictionary, 3rd edt.



Sources & references
Risk disclaimer
James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.