FORMS OF DIVIDEND
Generally, the dividend can take any of the following forms (depending upon some factors will be discussed later):
1. Cash dividend: It is the most common form of dividend. Cash here means cash, cheque, warrant, demand draft, pay order or directly through Electronic Clearing Service (ECS) but not in kind
2. Stock dividend (Bonus Shares): It is distribution of shares in lieu of cash dividend to existing shareholders. When the company issues further shares to its existing shareholders without consideration it is called bonus shares. Such shares are distributed proportionately thereby retaining proportionate ownership of the company. If a shareholder owns 100 shares at a time, when 10% dividend is declared he will have 10 additional shares thereby increasing the equity share capital and reducing reserves and surplus (retained earnings). The total net worth is not affected by bonus issue.
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