Scrip Dividend - how to treat them in valuation?

[CityFarmer]

Here's a different way to look at it. I'll use a real example to illustrate:

Company X declared a $0.015 final dividend, with Scrip Dividend Scheme. Issue price of scrip was decided to be $0.21, which represented about 9.5% discount to price around XD. So for those who opted for scrip, for every share that they had, instead of receiving $0.015, they would be getting 0.07142857 new shares instead (1.5/21).

This whole exercise is essentially equivalent to Company X giving a $0.015 final cash dividend, together with a 0.07142857-for-1 NON-RENOUNCEABLE rights issue at $0.21. Basically those who opted for scrip are those that take up the right and pay up, and those that opted for cash forfeited their rights.

Now, we often hear complains about companies giving dividend, followed by rights issue ("give money already then take back again?!"). So why should this exercise of dividend payment, together with rights issue at a weird factor which is an irrational number, with the rights being non-renounceable (you either take it up or forfeit, you can't sell those "rights"), be celebrated or encouraged?

Assessing the merit of scrip dividend without considering the purpose of the corporate event, is meaningless.

We celebrate or encourage the scrip dividend come with a hidden assumption i.e. the company will re-invest the proceed with a better return.

If right issue has similar effect, i will welcome it.