Dividends could be paid out to investors through cash dividends or stock dividends. In terms of the stock dividend, besides tax advantage when they don't sell out the shares compared to cash dividends, what are the other benefits from this?
Take an example (from Investopedia): if a company were to issue a 5% stock dividend, it would increase the number of shares by 5% (one share for every 20 owned). If there are one million shares in a company, this would translate into an additional 50,000 shares. If you owned 100 shares in the company, you'd receive five additional shares. This, however, like the cash dividend, does not increase the value of the company. If the company was priced at $10 per share, the value of the company would be $10 million. After the stock dividend, the value will remain the same, but the share price will decrease to $9.52 to adjust for the dividend payout.
So originally, you own: 100*$10= $1000 After stock dividends, you own: 105* $9.52= 999,6
The value is the same as well as your percentage ownership since everyone gets 5% stock dividends as well. Only the number of stocks you hold increases, then how does it matter?