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Author: salem25 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 28  
Subject: Stock Dividend? Date: 3/10/1998 10:34 PM
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OK, I'll bite. I know what a cash dividend is, but what does a 20% stock dividend mean.

Does it mean that FAME will issue you another 20% of shares based on the number of shares that you hold on 26 Mar. That's a huge bonus if the share price doesn't dip afterwards to offset it. Seems like it would.

A friend said maybe they're taking 20% of some value (like sales) and paying it out per share. I said that I didn't see how that would be called a "stock" dividend.

If FAME has a bunch of extra cash, how is issuing stock going to reward the stockholder. I thought that stock was issued to "raise" money, not spend it.

I've always been under the impression that the market is always looking to the future, and the value of a stock reflects that future. It doesn't look like the news of a special 20% stock dividend did anything to the price of FAME. I'm confused.

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