Stock Dividends
- Again, suppose you owned 50 shares prior to the dividend:
50 shares x $61.33 = $3,067
- Now after the dividend:
75 shares x $40.89 = $3,067
Again, totals remain the same.
- Why would firms issue stock dividends if shareholder wealth does not increase? In fact, stock dividends may impair the ability to receive cash dividends in the future.