Return of capital (ROC) refers to principal payments back to "capital owners" (shareholders, partners, unitholders) that exceed the growth (net income/taxable income) of a business or investment.
[1] It should not be confused with Rate of Return (ROR), which measures a gain or loss on an investment.
[2] ROC effectively shrinks the firm's equity in the same way that all distributions do.
In an efficient market, the stock's price will fall by an amount equal to the distribution.
Most public companies pay out only a percentage of their income as dividends.