Stock dividends, stock splits, and reverse splits
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Solution Summary
This solution is comprised of the detailed definition of stock dividends, stock splits, and reverse splits. It also consists of detailed explanation of how stock dividends, stock splits, and reverse splits affect the firm and the investor. A list of references is also provided.
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Stock dividend is a payment made by a firm to its owners in the form of stock, diluting the value of each share outstanding.
Stock split is an increase in a firm's shares outstanding without any change in owners' equity.
Reverse split is a stock split in which a firm's number of shares outstanding is reduced.
Citigroup, Inc and SunTrust Banks, Inc.
Citigroup, Inc. (C) started with a two-for-one stock split on March 13, 1987 (Yahoo Finance, 2009), meaning that each old share is split into two new shares. By April 6 of the same year, Citigroup, Inc. started to pay out dividend of $0.0333 per share. This amount lasted until October 3, 1988. By 1989, the company reduced its dividend payment to $0.00583. It kept coming back up to February 2, 1993 to $0.02 dividend. By March 1, 1993, the firm had a three-for-two stock split, meaning that for each two old share is split into three new shares. The firm had a four-for-three stock split again in August of the same year. After this split, the dividend fell and caught back up again in 1994. Thus, since the company went public in 1987, Citigroup, Inc. has split two-for-one once and three-for-two four times and four-for-three three times. The highest dividend Citigroup, Inc. has was $2.415 dividend in August 21, 2002. This ...
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