extraordinary dividend
Extraordinary Dividend is a one off payout a company makes outside its usual dividend pattern, often after selling an asset or having an unusually good year.
In plain English
Every family has that uncle who does not send money home every month, but when he sells his old car or gets a big contract alert, he shares something extra with everyone at once, and nobody complains.
A company can behave like that uncle. Most companies that pay dividends do it on a steady rhythm, maybe once or twice a year, tied to their normal profit. An extraordinary dividend breaks that rhythm entirely.
It usually shows up after something unusual happens to the company's fortunes. Perhaps a Nigerian company like Nestle Nigeria sells off a factory it no longer needs, or a bank recovers a huge long owed loan, or a business collects a one off insurance settlement after a fire. Instead of sitting on that windfall, the board decides to hand a slice of it straight to shareholders.
In the United Kingdom, this happens too. A company might sell a subsidiary abroad, and rather than reinvest every kobo of the proceeds, it declares a special payout on top of its regular dividend, sometimes calling it exactly that, a special dividend.
For a shareholder, this is a pleasant surprise rather than something to plan a lifestyle around, because it will not repeat next quarter or next year. It also often triggers a temporary jump in the share price around the announcement, followed by a drop on the day the dividend is paid out, since the company is literally sending cash out the door.
If you have relatives abroad who own shares in a Nigerian company and suddenly see extra money land in their brokerage account, this is usually the reason. It is a bonus, not a raise.
Suppose a company like Seplat sells one of its oil fields for a large sum and decides to share ₦50 per share of that proceeds with shareholders, on top of its usual ₦20 dividend. That extra ₦50 is the extraordinary dividend, a once off thank you tied to that specific sale, not a new normal to expect every year.
Questions people ask
Will I get an extraordinary dividend every year from the same company?
Almost never. By its nature it is tied to a specific one off event, like an asset sale or unusual profit. Do not budget your school fees or rent around it happening again next year.
Is an extraordinary dividend taxed differently from a normal dividend?
In most cases it is treated the same way as a regular dividend for tax purposes, but rules can vary by country, so it is worth checking with a tax adviser, especially if you are receiving Nigerian dividends while living abroad.
Does the share price always fall after an extraordinary dividend is paid?
Often yes, because the company's cash reserves fall by the amount paid out, and that is reflected in the share price on the payment date, though the drop is usually close to the size of the dividend itself.
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