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Allocation

dividends stock principal beneficiary

The apportionment or designation of an item for a specific purpose or to a particular place.

In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as income to be paid to the beneficiary. The allocation of stock dividends generally means that such dividends will be added to the shares of stock held as principal, thereby increasing its size.

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