Due to the number of queries generated by the earlier post, here’s a compilation of answers:
1. Stock Dividend vs. Stock Split: To a current shareholder, not much difference really. Value does not change but board lot concerns will be present. Madami ka ngang shares eh kung maging odd-lot naman? :p To a prospective investor, a stock dividend or split MAY make it more affordable.
DMC’s 400% stock div. If you have 10 shares today, you can sell it all. (Closed at 76). Now, after you receive the dividend, you will hold 50 shares and if the previous close is still 76 pesos, each of your shares will now be worth…… 15.20 pesos. With a board lot of 100, odd-lot na ang buong holdings mo. Hence, make sure you have at least 20 (and multiples thereof) shares of DMC para board lot pa din after.
2. A stock dividend WILL result in a downward price adjustment.
3. Stock dividends give larger holders more flexibility kasi nga nababarya holdings nila. An EXTREME example of this would be Buffett’s Berkshire Hathaway that sells for almost $ 200,000 PER share. So if you just had one share, all or nothing ka but if they gave a stock dividend, mababarya hawak mo and you can sell portions of it.
4. Stock dividends (in my opinion) will never be better than a cash dividend since it requires the price to go up for the dividend to actually have any value. Cash dividend gives you value immediately.
5. Long-term investors are more vulnerable to getting odd-lots kaya hindi talaga ok ito para sa kanila. And once you get an odd-lot, ang hirap talaga makabuo ulit. Mahirap pero hindi impossible.
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