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Author: makfan Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 942  
Subject: Re: Still Missing the Point Date: 2/26/1999 2:21 AM
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Yet last December, a stock that I own split 5 for 4 "in lieu of dividend". The share price stayed the same. I believe that's a 25% instant gain. Had I sold after the split at the then market price, I'd been 25% ahead from the day before. [Considering today's price, I sometimes wonder if I should have sold it].

This may be a different situation from a split. A company can issue a stock dividend, which gives the shareholder additional shares. The value of this comes out of the retained earnings of the company, and the price per share does *not* get reduced on the markets. But, the future earnings per share *is* diluted because of the additional shares.

I don't particularly like stock dividends in lieu of cah dividends because of the earnings dilution, but if the company can grow earnings fast enough, then it might be OK.
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