What is a stock dividend? How is a stock dividend calculated? Which is better, stock dividends or cash dividends?

Stock dividends, simply put, are a way for companies to give shares to their shareholders. It's not about giving money, it's about giving stocks. Interesting, right?

Why does the company want to do this? There are many benefits. First, the company does not have to spend cash. Companies with tight funds love this move. Giving out stocks makes shareholders happy, and the money is kept. It's a win-win.

But it is a bit complicated. After sending the stocks, the value per share will be diluted. What about your equity ratio? It remains unchanged. It's just that the number of stocks in hand has increased.

How is it calculated? It means for every 10 shares, you receive X shares. If the company states that for every 10 shares, you receive 0.5 shares, and you have 1000 shares, you will receive an additional 50 shares. It's quite simple to calculate.

After the dividend is distributed, the stock price will adjust. This is called "ex-dividend." It may feel like you haven't made any profit, but don't rush.

In the long run, if the company grows well, these additional shares may bring more returns. It seems more cost-effective than taking cash. However, this is not entirely clear.

What about cash dividends? Just take the money, clear and straightforward. But taxes have to be paid. Some people just like this instant feeling.

In 2025, there will be new regulations. Want to receive dividends? You must hold the stock before the ex-dividend date. The ex-dividend date is usually the day before the record date. Currently, trading settlement requires T+2 days, so you need to calculate the time carefully.

The tax part is a bit troublesome. Different countries have different regulations. The qualified dividend tax rate may be lower. Foreign withholding tax? It can be handled with tax credits.

So, which one is better? It depends on the situation. Are you a long-term investor? You might prefer stock dividends. Short-term arbitrage? Cash dividends might be more suitable for you. It's a personal choice, and there is no standard answer.