Regular cash flow is often one of the reasons why private investors and investors alike opt for high-dividend shares. While in Germany a dividend is usually paid out to shareholders once a year in the form of a cash amount, in the USA, for example, a quarterly dividend payment is common. In addition to the distribution of a cash dividend, investors in some companies have the option of a Distribution in the form of new shares (stock dividend or stock dividend).
What is a stock dividend?
As Stock dividend A stock dividend is the distribution of a dividend in the form of new shares instead of the usual cash distribution. The stock dividend (from the English "stock" = share) is therefore also referred to as the Stock dividendThe term "bonus share" is used to refer to a bonus share, bonus share, bonus share, bonus share or bonus share.
The shares are allocated on a pro rata basis. For example, if you own 100 shares and a stock dividend of 3% is distributed, you will receive three shares.
In Germany, companies usually pay a cash dividend once a year. A stock dividend comes Relatively rare before. In other countries, too, a cash dividend is paid more frequently than a stock dividend.
If a stock dividend is distributed, the investor generally has the Choice between distribution as cash or in the form of shares. In Germany, the legislator even prescribes the freedom of choice or requires a preceding dividend payment for the distribution of a stock dividend.
The stock dividend from the company's point of view
From a company's point of view, the stock dividend represents a distribution of profits, but the profit remains within the company itself.
The shares may be provided from treasury stock or from a capital increase.
