What’s a stock dividend?

A stock dividend is also known as a bonus share. If you hold the listed company’s shares after settlement on the day before the ex-date, you are eligible to receive stock dividends.

1. Participation requirements: If you hold the listed company’s shares after settlement on the day before the ex-date, you are eligible to receive stock dividends.
2. Process time: If you meet the requirements for receiving stock dividends, Longbridge will process the stock dividend on the distribution date and credit the bonus shares to your account. The bonus shares are identical in nature to the existing shares of the underlying security.
3. Stock prices and shareholders’ profits/losses on the ex-date:
   On the ex-date, the stock price of the listed company will drop, and shareholders will see a loss in their holdings before the market opens. However, this loss amount will be offset by bonus shares credited to the shareholder’s holdings.

In other words, after receiving stock dividends, shareholders’ holdings will change from consisting solely of the shares of the underlying security to consisting of the shares of the underlying security (now at a decreased price) plus the bonus shares (whose value is equivalent to the decreased amount of the underlying shares’ value).

This article is for reference only and does not constitute any investment advice.