Scrip Dividend - how to treat them in valuation?

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(19-02-2013, 05:12 PM)CityFarmer Wrote:
(19-02-2013, 04:47 PM)zhangwuji Wrote:
(19-02-2013, 01:38 PM)ikur1 Wrote: So a company that's supposed to pay out cash dividend to shareholders, now issue shares instead

outstanding shares have increased - diluting current owners who do not buy back in

this kinda confuse me:
the company in a way issues shares for free in respect of the cash dividends to be issued, by issuing shares instead, the cash stays with the company

so does that mean for companies that have this policy, those shareholders who opt to receive cash lose out in the long run?
since his holdings have been diluted continually?

Thanks for the sharing masters Smile

I usually opt to receive scrip dividend instead of cash. The reason being that they always come with discount. And it save some much commission cost if I were to buy from the market. If I am right, the company concerned usually need to buy from the market and distribute to shareholders who choose to receive scrip dividend. So there is actually no dilution on NAV for those who receive cash.

Can some industry expert comment?

Scrip dividend usually supported by issued new shares, instead of acquired from open market. In short, dilution is there if opt for cash instead of scrip.

HuhHuhHuh
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RE: Scrip Dividend - how to treat them in valuation? - by zhangwuji - 19-02-2013, 05:35 PM

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