Stock Dividend

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Stock dividend is where a company pays in terms of stock rather than cash and this will not affect the fundamental position of the current stockholders. An example is a stock dividend of 2%, the stockholder of 50 shares would get 2 additional shares without any cost, and the same with a stock dividend of 5% would get 5 extra shares.

I would prefer cash dividend because it is a good as money in the pocket and they are ordinary income. Also because of liquidity ratio, cash dividend will be more liquid and will eliminated the risk of uncertainty than that of stock dividend which make a shareholder to hold the stock with anticipations of share to rise their prices.

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Cash Dividend Stock Split
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