Water Stock (To)

To add extra shares. Suppose a “trust” (q.v.) consists of 1,000 shares of £50 each, and the profit available for dividend is 40 per cent., the managers “water the stock,” that is, add another 1,000 fully paid-up shares to the original 1,000. There are now 2,000 shares, and the dividend, instead of £40 per cent., is reduced to £20; but the shares are more easily sold, and the shareholders are increased in number.