young wrote:Ericsson wrote:
A bonus share issue of 1:10 would perfectly compensate shareholders a dividend of ksh.3.50 per share based on the current prevailing share price.
Please explain ? Thanks.
Assume you have 10,000 KCB shares.
You are to get a dividend of ksh.3.50 per share.
The total dividend you are to get is (35,00-1750)=33250.
But instead KCB decides to give you a bonus share issue of 1:10.
Means you will get an additional 1,000 shares.Current share price of KCB is 37.
Adjusting the share price to cater for the dividends means you will get 1,000 shares worth ksh.33.3 per share.
Total value of shares allocated is ksh.33,300.
The ksh.33,300 is equal to the dividend you would have received.
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