What happened?

  • AP announced that it would pay a stock dividend of 10:1 plus a cash divvy of THB 0.02/share, the last time it had paid a stock dividend was on the 4th May 2011
  • EPS Dilution = 9.1%ap

Now why would companies want to pay out a stock divvy?

  • Personally I don’t care much for it, but companies will argue that:
  1. It helps increase liquidity in the stock
  2. It helps to maintain financial liquidity (b/c equity increases and thus the company can take on more debt)
  3. They can keep cash in the company to continue investing further and the aim is to grow earnings faster than the impact of dilution

Have any companies successfully paid a stock divvy & had earnings that outgrew its dilution?

  • Off the top of my head only two, HMPRO and WHA, the rest? Nope I’ve only seen sagging stock prices post a stock dividend.

Image Source: Bing finance

      • I mean it can only be neutral or positive from what it was prior to the stock dividend announcement. But judging from experience of other stock divvy, looks like to to be positive.

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