UN Blog: What is the difference between a 100% stock dividend and a 2-for-1 stock split? and stock market crash

Thursday, January 2, 2014

What is the difference between a 100% stock dividend and a 2-for-1 stock split? and stock market crash

What is the difference between a 100% stock dividend and a 2-for-1 stock split?

If a company is trying to recruit more investors without affecting the owners equity section of their financial statement (especially retained earnings), which option is the better option? 20% stock dividend, a 100% stock dividend or a 2-for-1 stock split? And why?

Stock best answer:

Answer by N3WJL
A 100% dividend means they pay you an amount equal to the price of the stock while you still own a share at that price.

For example Stock price = $ 100
Dividend = $ 100

You now have a stock worth $ 100 plus $ 100 in cash in your pocket.

2-1 split means you now have 2 shares of stock instead of 1.
When it splits the value goes down because more shares are on the market.

Pre split 1 share = $ 100
Post split 2 shares each worth $ 60 for a total of $ 120

see the difference?

What really attracts investors is a stock price the increases. Unless you are looking for income the dividend doesn't mean much. I invest for the long term so I want to see an increase in the stock price so I can make $ $ $ when I sell the stock.