What does it mean if the company give 100% stock dividend. For example I have 1,000 shares, I would received another 1,000 stock or share? I'm newbie in investing.
Thank you so much.
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2 Answers
A 100% stock dividend means that you get one share of the "stock dividend" for every share you own.
For example, Google did this in 2014 when they gave all of their Class A shareholders one class C share for every Class A that they owned.
If the 100% stock dividend is for the exactly the same stock, it is basically the same as a 2-for-1 stock split.
If, however, the 100% stock dividend is to give you a different stock, then this is typically due to a corporate reorganization or demerger/spinoff event.
Some countries have different tax treatments for the events - for example, with demergers in Australia, Class Rulings need to be obtained from the Australian Taxation Office to declare demergers as tax free. A recent demerger was in Australia as South32, demerged from BHP Billiton.
References:
http://economix.blogs.nytimes.com/2014/04/02/the-many-classes-of-google-stock/ http://www.bhpbilliton.com/investors/shareholderinfo/demerger-taxation-information
answered Aug 12, 2015 at 8:06
Simply put, 100% stock dividend is 1:1 or 1 for 1 bonus share, as explained above, if you held 100 shares after 1:1 bonus you would have 200 shares (100 original, another 100 as bonus). The impact on the stock price is that the price becomes 1/2 the price of the stock before bonus (supply has doubled).
1:1 bonus is nor exactly like a 2:1 / 2 for 1 stock split, in a split the face value if the share would also go down.
In effect, any bonus share is not of any fundamental value to the shareholder, as the companies usually capitalize reserves from previous year/years this way as the value of the company does not change fundamentally. In effect the company is taking your money and giving you shares instead.
