Please help dividend question

Question

is it irrational for a company to sell a new issue of stock and to pay dividends during the same year

Answer 1

closed end funds, which are stock, do that very frequently.  

Answer 2

No the buyers are aware of the dividend in setting a "bid" for the new stock being issued.  Is is really a rational approach.   A $20.00 with a $1.00 per annum dividend the "bid" should be  $21.00.  That is assuming the secondary offering is well received by the market and does not punish the already outstanding stock.  A successful offering is usually linked to a compelling reason for the new issuance: a nat. gas that has found some "sweet spot" to develop, an established drug company that has a new "miracle" drug for a specific cancer, or an Alzhimers therapy, etc.  If the reason for the new issuance makes sense then I am looking to buy into the new offering.  The dividend is not material to my decision; but, it to other investors who have an interest in some income protection for the risk taken.  Since you are offering additional common shares they must come with the same characteristics as the existing shares.  Not irrational.