Exploring Stock Bonus Issues
Bonus Issues
A bonus issue is a dividend on stock that the company gives to owners as a way to thank them. People who own shares get cash rewards, but stocks are given out instead of cash in a bonus issue. Bonus shares are given out from the company's savings. The owners get these free shares in exchange for shares they already own. Most of the time, these fractions are set at a specific ratio, like 1:1, 2:1, 3:1, etc. When there is a bonus problem, the stock price goes down by the amount of the bonus ratio. However, this drop should not be mistaken for a correction or a fall in the stock price.
During a bonus issue, the value of your investment stays the same before and after the issue. Only the number of shares you own grows.
The dates of the bonus notice, the ex-bonus date, and the record date are the same as those for the dividend issue.
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Table of Contents : Corporate actions and effect on stock prices 2. Dividends - portions of profits made by the company 3. The time line to understand the Dividend payment cycle |
