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.

Source: Dictionary of Phrase and Fable, E. Cobham Brewer, 1894
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