Stock dividends provide new shares to existing stockholders

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Write a discussion response to the statement below:

Stock dividends provide new shares to existing stockholders in a proportion to the amount of stock that they already own. The total value of stock increases as there are more shares outstanding, at the same price per share. Because dividends do not increase profits and do not increase risk to the firm, there is no economic change.

Stock splits offer a number of new shares for each existing share outstanding, which cause the prices per share to drop. Doing this brings the price per share to a more tradable range, which can bring new investors who can now afford the stock.

Reference no: EM131342555

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