UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next
Author: PhilWeiss One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2794  
Subject: Re: Stock Dividends and Stock Splits Date: 7/11/2007 10:42 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
It's been awhile since I looked at this but there is a difference. A stock split simply increases the number of shares by a pre-determined ratio. There should not be an impact on par value or paid-in-capital. Here the company simply increases the number of shares outstanding.

If there is a stock dividend, each shareholder receives additional shares as the firm issues new shares in lieu of paying a cash dividend. If 10%, shareholders would get 10 shares for each 100 shares of stock owned.

A company may choose to pay a stock dividend, which is a dividend paid in shares or fractions of shares, instead of cash. A stock dividend merely lowers the cost per share of your holdings; it does not change the total value of your holdings. For example, if you owned 100 shares of stock worth $1,000, each share would be worth $10. If a 25% stock dividend were paid, you would then own 125 shares whose total value would still be $1,000. However, each share would then be worth $8.

A stock dividend is usually nontaxable at the time paid unless the company offers the stockholder the option of receiving the dividend in the form of either stock or cash.

Phil
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next

Announcements

Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Value Hounds

Back to the Future Buffalo Wild Wings
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement