Scrip dividend

A scrip dividend can conserve company cash while providing shareholders with additional shares. Some schemes offer shareholders a choice between cash and shares; terms, approvals and tax treatment depend on the jurisdiction and scheme. Issuing shares does not itself create additional underlying business value, and the increased number of shares affects per-share measures. Distinguish a scrip dividend from a bonus issue funded by capitalising reserves and from a reinvestment plan that purchases existing shares. Consider investor preferences, dilution and the signal sent by the decision.