Explain a stock dividend and further explain if you would prefer it to a cash dividend.?

Question

Explain a stock dividend and further explain if you would prefer it to a cash dividend.

What are stock splits and how desirable are they.

Answer 1

Stock splits are nothing more than a play on prices instead of having 100 shares at 200 bucks each with a 1:2 stock split you will now have 200 shares at 100 bucks each. And it is not an indicator of anything, berkshire hathaway (warren buffett's company) has never split and never will split and its trading at 120,000 a share. Stock dividends are like stock splits intead of giving you 2 chares for every 1 you own, now maybe you get 1.05 shares shares for every one, hence a 5% stock dividend. But the scenario is that same since you get more shares but their prices go down by 5%.

So real dividends pay you cash

Stock splits and Stock dividends attempt to fool you into thinking you got something when in reality you didnt, they are plays on emotion nothing more.

Answer 2

A split is easy to answer. If the stock is $50.00 and you own 100 shares the value is $5000.00. If the board of directors decides to split the stock , say 2 to 1. the most common. you would have 200 shares at $25.00. It's done for a variety of reasons. One is if a stock is very expensive, It's a bullish  indicator. the company anticipates the stock going higher. So now, a $1.00 move in the stock returns to you $200.00 instead of $100.00.

Unless you need the income, choose to have your dividends re-invested in the stock.

Answer 3

stock dividend

http://beginnersinvest.about.com/od/divi...

cash dividend

http://beginnersinvest.about.com/od/divi...

dividend

http://en.wikipedia.org/wiki/Dividend

Which is better a cash dividend or a stock dividend?

http://www.investopedia.com/ask/answers/...

stock splits

http://www.sec.gov/answers/stocksplit.ht...

Understanding Stock Splits

http://stocks.about.com/od/understanding...