What is the difference between a 100% stock dividend and a 2-for-1 stock split?

Question

If a company is trying to recruit more investors without affecting the owners equity section of their financial statement (especially retained earnings), which option is the better option? 20% stock dividend, a 100% stock dividend or a 2-for-1 stock split? And why?

Answer 1

There is no difference in the 2-1 and 100% dividend. In accounting, a stock dividend of more than 25% is accounted for as a split, simply double the shares and halve the par value per share. With a dividend, you debit retained earnings and credit common stock, but that does not affect overall equity.

Answer 2

A 100% dividend means they pay you an amount equal to the price of the stock while you still own a share at that price.

For example Stock price = $100
Dividend = $100

You now have a stock worth $100 plus $100 in cash in your pocket.

2-1 split means you now have 2 shares of stock instead of 1.
When it splits the value goes down because more shares are on the market.

Pre split 1 share = $100
Post split 2 shares each worth $60 for a total of $120

see the difference?

What really attracts investors is a stock price the increases. Unless you are looking for income the dividend doesn't mean much. I invest for the long term so I want to see an increase in the stock price so I can make $$$ when I sell the stock.

Answer 3

Ehm..
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Answer 4

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Answer 5

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