A special dividend, also called an extra or extraordinary dividend, is a non-recurring dividend that a company declares in addition to its normal payments. Companies pay one when they hold more cash than they need, typically after selling a business, a period of unusually high profits or a legal settlement. Labelling the payment as special tells investors not to expect it again, so the regular dividend, which markets expect to be sustained, is left unchanged.
It is one of several forms of shareholder distribution; the main alternative for returning a large sum is a share buyback. A special dividend pays every holder in proportion and is usually taxed as income. Operationally it follows normal cash dividend processing, with a record date and an ex-dividend date. Because the payment can be large relative to the share price, exchanges may apply special ex-date rules, and UK companies often combine it with a share consolidation.