latin spanish women dating meet - Affects of declaring dividends and liquidating

by  |  18-Mar-2016 18:49

For example, if a company were to issue a 5% stock dividend, it would increase the amount of shares by 5% (1 share for every 20 owned).If there are 1 million shares in a company, this would translate into an additional 50,000 shares.If you owned 100 shares in the company, you'd receive five additional shares.

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If the company was priced at $10 per share, the value of the company would be $10 million.

After the stock dividend, the value will remain the same, but the share price will decrease to $9.52 to adjust for the dividend payout. The shareholder can either keep the shares and hope that the company will be able to use the money not paid out in a cash dividend to earn a better rate of return, or the shareholder could also sell some of the new shares to create his or her own cash dividend.

The biggest benefit of a stock dividend is that shareholders do not generally have to pay taxes on the value.

The purpose of dividends is to return wealth back to the shareholders of a company.

There are two main types of dividends: cash and stock.

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