Difference between bonus issue and stock dividend

Difference between bonus issue and stock dividend : Here the investment is the main thing when it accomplishes the financial goals. Earning money and keeping idle in your bank account is the same as losing the opportunity. The shares can invest your hard-earned money. They are issued by companies to accumulate money from investors for the expansion of the business. When a company earns a surplus/profit they will issue as a proportion of profit to shareholders in the form of dividends. The bonus share means the company decides to extra shares to its shareholder. Then stock is part of company profit that the company distributes in the form of cash. The main use of issues of bonus shares is to increase the liquidity of shares of a company. The quick shares can be bought and sold in the market without affecting the price. So the purpose of stock dividends is to distribute wealth back to the shareholders of the company. The bonus shares will decide to distribute to shareholders in the form of a ratio. Then stock dividends will decide to be distributed to shareholders in the form of a percentage. The bonus share provides non-monetary benefits. The stock dividend is called monetary benefits. The stock dividend is a payment made by companies to allocate wealth to their shareholders in the form of shares on top as already owned.

Bonus issue

The bonus issue is called a scrip issue /capitalization issue. They offer free shares to the existing shareholders. The bonus issue of shares has caked the stock issued by a company in lieu of cash dividends.

Stock dividend issue

The stock dividend is the dividend payment to shareholders made in shares rather than cash. The advantage of stock dividends is rewarding shareholders without reducing the company's cash balance. They can dilute earnings per share.

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