Is it legal if a company buys you a stock instead of paying you dividends?
<p>I have bought some stocks.  However I just noticed that I now have one stock that I didn’t buy.  Someone suggested that one of the stock companies instead of paying me dividends bought me that stock.  How can I find out if this is what happened and if so, if a stock company has the right to do that, without even asking for my permission?</p>

<p>It is not uncommon for a company to issue additional shares to shareholders instead of paying a cash dividend. This is known as a &quot;stock dividend&quot;. Such payment may (less commonly) be in shares of another, often related, company. If that is the source of the stock in question there is nothing illegal about it.</p>
<p>Your broker should have a record of your transactions and whether any stock came from a stock dividend or some other source.</p>
<p>Accordion to the Investopedia article on <a href="https://www.investopedia.com/terms/s/stockdividend.asp" rel="noreferrer">&quot;Stock Dividend&quot;</a>:</p>
<blockquote>
<p>Also known as a &quot;scrip dividend,&quot; a stock dividend is a distribution of shares to existing shareholders in lieu of a cash dividend. This type of dividend may be made when a company wants to reward its investors but doesn't have the spare cash or wants to preserve its cash for other investments.</p>
<p>Stock dividends have a tax advantage for the investor. The share dividend, like any stock share, is not taxed until the investor sells it unless the company offers the option of taking the dividend as cash or in stock.</p>
<p>A stock dividend may require that the newly received shares are not to be sold for a certain period of time. This holding period on a stock dividend typically begins the day after it is purchased. Understanding the holding period is important for determining qualified dividend tax treatment.</p>
</blockquote>
<p>The Wikip[edia article <a href="https://en.wikipedia.org/wiki/Dividend#Forms_of_payment" rel="noreferrer">&quot;Dividend&quot;</a> says:</p>
<blockquote>
<p>Stock or scrip dividends are those paid out in the form of additional shares of the issuing corporation, <strong>or another corporation</strong> (such as its subsidiary corporation). They are usually issued in proportion to shares owned (for example, for every 100 shares of stock owned, a 5% stock dividend will yield 5 extra shares). (<em>emphasis added</em>)</p>
</blockquote>
<p>So dividends payed in the stock of another company are perfectly possible, although less common.</p>

fraud