Everyone might be familiar with the paradox of the Prisoners’ Dilemma — one of the most popular concept in modern game theory in Economics. By nature, individuals tend towards acting in or protecting their own interests, by not cooperating with one another, they tend to find themselves in a worse state than they would have by cooperating.

I wrote about understanding Scrip Dividend Scheme better in a previous article. Scrip issue usually enlarges the company’s share capital base, through the creation of new shares. New shares lead to share dilution, potentially. Existing shareholders faces share dilution if they opt for cash over scrip. Shareholders who opt for scrip over cash minimally maintain or increase their stake (depending on the subscription rate) at the expenses of the earlier camp.

There is no right or wrong; the decision on choosing scrip over cash dividends or vice-versa is entirely an investment decision depending on what you plan to do with the counter in the future.

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