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it depends on personal prefrence of investors..if dividend results in heigher tax payment than capital gains ,then investors might preffer to take dividend in form of bonus share ,well some parties may need cash in order to fulfill their needs i.e institutional inverstors like to take divident in form of cash to run theirs opration smoothly.its a huge topic as a said earlier it depends on personal prefrence of investors..
Dividends are the most amasing topic in finance. Dividend decision has remarkable impact and also the potential to change the fate of the Organisations. The cash dividends are most popular and highly welcomed by investors, as they provide flow of cash to various segment of investors who expect immediate returns. On the other hand, specie dividend or non cash dividend are preferred by investor who want capital gains in the long run. If a company is paying more and more in cash dividends, it implies that it want to induce its investors and hence use the cash resources in paying higher dividends. Whereas, another company would invest it available cash resources, in most attractive, viable and profitable projects to provide long term gains to the investors. Hence, a realistic investors prefer specie diveidend to a cash dividend.
Different investors have different preferences. Some prefer cash dividends while others go for stock dividends. The price of the stock falls in either case i.e. whether the company pays cash or stocks when it opens "ex" after the close out period otherwise an atbitrage opportunity exists for people like us ;)
Yes, Agree.This will help us choose better options to invest.
Agree. Specie dividends most likely will result in drop of the stock market price and therefore the investment will lose its worth. Cash dividends on the other hand provide actual realtime return that will encourage investors to remain and is more credible to external audience.
Agreed in general and disagreed if there is high tax in cash dividend and tax free for share dividend
