General talks on equities

In the United States, this is called a "stock split." While it is true that you don't benefit immediately because the value of your holdings doesn't change with the split, it may be that the stock is more affordable after the split, so trading volume goes up, increasing the potential for future gains in value. For example, if the stock is traded in lots of 100 shares, at 100 Rs, a potential buyer must be willing to invest 10,000 Rs, but if the stock splits, the minimum investment is reduced to 5,000 Rs.

Dave

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The answer is you don't benefit financially.

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Unless it pays dividend - they usually double

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Please cite at least two examples where a stock with a significant (more than 2%, say) dividend, kept the dollar value of the dividend the same after the split, thus doubling the yield upon splitting. I think what you suggest is the exception, not the rule. Joe

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Aren't dividends usually calculated as a percentage of stock price?

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Well, no. Motorola, for example, shows a 20 cent per year dividend. The fact that yahoo will do the math for you and say it's 2.1% of the current price means little.

A $50 stock, upon splitting, may adjust it's dividend from $1 to 50 cents, or announce a bit of increase, and make it 55 or 60. But to jump it (back) to $1/share after split, I've not seen.

Joe

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I think you're confusing 'dividend' and 'yield'.

-Will

william dot trice at ngc dot com

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"joetaxpayer" wrote

Little caveat for the newbie finance.yahoo users: The dividend yield shown can be highly misleading. This is especially so for stocks that do not pay dividends four times a year. For example, AIB. It has been paying a dividend twice a year for some time now, with about 2/3rds paid in the first part of the year and 1/3 paid in the second part. finance.yahoo's summary page misleadingly just doubles the most recent dividend.

Re dividends and splits: I agree with Joetaxpayer. I wonder if the problem is that "Tex Shalter" was using finance.yahoo's historical prices page and did not realize that the dividends shown have already taken into account splits.

It's best to go to a company's web site and just search for dividend history.

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