Scrip Dividend

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A scrip dividend is a scrip or bonus issue of shares made at no charge to shareholders in proportion to their holdings in lieu of a cash dividend.

It usually takes two forms either as a promissory note discountable before its due date which is called liability dividend or as an ordinary shares reflecting capitalization of a part of reserves which is also known as capitalization issue.

Companies short on cash 💰 often pay scrip dividends instead of cash dividends to retain cash for expansion.
Recently, Stanbic IBTC offers a scrip dividend option for 3-year to any of its willing shareholder.

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Comments

  1. Unknown6 January 2019 at 23:41

    Good one! It has been a very long time that I searched for financial planning and terms related to it. My daughter asked me about Balance Advantage funds other day and I felt bad about not knowing the correct meaning.

    ReplyDelete

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