By: La Papillion A fellow forum user asked me to explain the basics of scrip dividends. Here is my response. I thought that it's important to highlight this (even though the question is on MIIF) because one of the companies that I have partial ownership on - Pac Andes - is also going to do scrips dividends. Here's my reply: ------------------------------------------------------- There are two ways that companies can distribute cash - one is through cash (the normal route) and the other is through scrips dividends. I have the fortune of investing in two companies that offer scrips dividends, so I have a little bit of experience dealing with both. Scrips dividends works like this basically: 1. Pays you the dividend in cash, but instead of you taking the cash, they buy more shares for you using the cash distributed to you from the dividends. The formula works like this: New scrips obtained = (number of shares held at book closure date x amount of dividend distributed per share)/Issue price Read more...