what is the difference between dividends and bonus shares?

Answer 1

In the UK dividend shares are issued in lieu of a dividend, that is you must give up a dividend to receive the shares. Bonus,or capitalisation shares, are issued to all shareholders from the reserves of the company. Bonus issues are a balance sheet adjustment and will not affect the overall market value of a holding. so a bonus issue of one share for every share held will halve the market value but of course you will hold twice as many shares so the overall value of the holding remains the same.

Answer 2

They are one and the same. Splits are different. For dividends the Retained earnings don't come down but for splits it do come down.