Difference between a cash dividend and a stock dividend

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Question: Managing your Writing: The investments committee of your church has come to you for advice. One of the stocks held by the church has paid cash dividends for years. This year, the company issued a stock dividend, so that the church received additional shares rather than cash. The committee is concerned about whether this stock dividend is really worth anything. One committee member argues the stock dividend is as good as cash; another argues that the dividend is worthless.

Write a brief report to the committee explaining the difference between a cash dividend and a stock dividend. Evaluate the value of the stock dividend compared with the cash dividend the church has received in prior years.

Reference no: EM132228479

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