It is true that managers try to avoid reducing their stock dividend because stockholders will look at it negatively.
When a company that pays dividends regularly, issues a lower dividend than normal or pays no dividend at all, it may be taken as a symbol that the company is facing hard times.
A stock dividend refers to an increase in the quantity of shares of a company with the new shares which are given to shareholders. Companies may choose to distribute this kind of dividend to shareholders of record if the company's has short supply of liquid cash .
If a company pays and receives a stock dividend at the end of a profitable fiscal year, it can be beneficial for both the company and the shareholder . This kind of dividend can be good like cash, because it has an added benefit of not paying taxes.
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