Stock split dividend question?

Question

If a stock splits is the dividend adjusted proportionatly to reflect the stock split? (e.g. if a stock pays a dividend which is 2.4% at a share price of 50 and it does a 2 for 1 split--the share price after the split becomes 25 does the dividend also change to remain at 2.4%?)

Answer 1

The company does not have an obligation to pay a dividend at all.  The directors will meet four times a year to vote on a dividend.

By custom, most boards will keep a dividend level or increasing if they can.  Boards never ever voe a percent.  It's always dollars and cents per share.  Usually, they will divide the dollar amount in half or divide it and add a few cents, which amounts to a dividend increase.  What this does to the percent dividend yield depends a lot on how the stock price has moved in the prior three months.

Answer 2

Normally, the dividend will be split also.  But many times the company will raise the dividend in conjunction with the split if the company in fact pays a dividend.