- 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%
Now why would companies want to pay out a stock divvy?
- Personally I don’t care much for it, but companies will argue that:
- It helps increase liquidity in the stock
- It helps to maintain financial liquidity (b/c equity increases and thus the company can take on more debt)
- 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.
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