Dividends, bonus shares, and rights
Understand three common corporate actions without treating any one of them as a free return.
Dividend
A dividend is a distribution a company declares under the applicable process. Eligibility, book-closure or record dates, taxes, and payment timing matter. Dividends are not guaranteed.
Bonus shares
A bonus issue increases the number of shares under its terms. Market price can adjust, so receiving more shares does not automatically create the same amount of new wealth.
Rights
A rights issue offers eligible holders the ability to subscribe under stated terms. It may require additional cash and has dates, tradability, and expiry conditions to understand.
Ignoring a rights deadline can have a different outcome from subscribing or selling an entitlement where permitted.
Three things to keep.
- 01Read the terms and dates
- 02More shares do not always mean more value
- 03A right can require action and cash
Is a bonus issue guaranteed profit?
Show the answer +
No. The share count changes under the issue terms and the market price can adjust. Total value still depends on the market.