Question
Can someone provide a discussion response to the information below? Thanks! From the e-Activity, contrast the differences between a stock dividend and a stock split.
Can someone provide a discussion response to the information below? Thanks!
From the e-Activity, contrast the differences between a stock dividend and a stock split. Imagine that you are a stockholder in a company. Determine whether you would prefer to see the company that you researched declare a 100% stock dividend or declare a 2-for-1 split. Provide support for your answer with one (1) real-world example of your preference.
Stock dividends are what shareholders receive from a corporation as a form of payment. 2 for 1 split mean the shareholders will receive double the amount of stock then they purchased. A stock split makes more of the corporate shares available and decreases the buying amount of the stock making the stock price reasonable. With 100% stock dividend the shareholder receive 100% of the stock they purchased. In other words, there are no extras as in the 2 for 1 (Investopedia, 2017).For the company that I researched I would prefer for the company to declare a 2 for 1 split instead of a 100% stock dividend. From reading the article below, it appears that the company wanted to increase the amount of stocks and the amount of stock owners. In 2015 Ross Stores declared a 2 for 1 split in order to accomplish the increase the amount of stock traded and stock owners (Zack Equity Research, 2015).
From the scenario, examine the dividend rate that TFC is paying in order to determine if the company should receive a rate adjustment. Suggest whether TFCs dividends should either (1) stay the same; (2) be increased; (3) or go down. Provide a rationale for your response.
TFC currently has a growth rate of 10% and a recent dividend of $10/share. TFC should stay the same and issue a rate adjustment after moving to the West Coast.Even though an increase in dividend rate would show the stockholders that TFC is a good investment and the company has a positive future, staying the same will show the stockholders the company is responsible with their investment. Once TFC has completed the expansion to the West Coast the company should increase the rate dividend. In addition, TFC should possibly consider a 2 for 1 split after the expansion.
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