A stock dividend is also known as a bonus share. Investors who hold the listed company's shares after the market settlement on the day before the ex-date are eligible to receive stock dividends.
1. Participation requirements: If you hold the listed company's shares after the settlement on the day before the ex-date, you are eligible to receive stock dividends.
2. Process time: If you meet the requirements for receiving stock dividends, Longbridge will process the stock dividend on the payment date, and the bonus shares will be credited to your account. The newly received bonus shares are identical in nature to the existing shares of the underlying security.
3. Impact on stock prices and shareholders' profits/losses on the ex-date:
On the ex-date, the share price of listed companies will fall, and shareholders will see a loss before the market opens. However, this drop will be offset by bonus shares added to the shareholders' holdings.
In other words, after receiving stock dividends, shareholders' holdings will change from consisting solely of the shares of the underlying security to consisting of the shares of the underlying security (now at a decreased price) plus the bonus shares (the value of the bonus shares is equivalent to the decreased amount of the underlying shares' value).
Disclosures
This article is for reference only and does not constitute any investment advice.
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Registered with the Monetary Authority of Singapore (MAS), Long Bridge Securities Pte. Ltd. is a Capital Markets Services Licence holder and Exempt Financial Adviser (Licence No. CMS101211).
A licensed corporation recognized by the SFC (CE No. BPX066). Holder of License Types 1 (Dealing in Securities), 2 (Dealing in Futures Contracts), 4 (Advising on Securities) and 9 (Asset Management). Also a registered HKEX participant and HKSCC participant.
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