What is the key benefit of a scrip dividend for the company?

Question

Quizplus · Accepted Answer

The key benefit of a scrip dividend for the company is that the cash does not leave the company, allowing it to retain the cash for use in operations or other investments. This can be especially important for companies that are in need of cash for growth or other reasons, as it allows them to avoid taking on debt or selling equity to raise the necessary funds. While taxation may be minimised under a scrip dividend, this is not typically the primary benefit for the company. Shareholder income may or may not be maximised under a scrip dividend, depending on the terms of the offer and the performance of the company's stock. Company income is not necessarily maximised under a scrip dividend, as the value of the company's assets may not be fully realised in the market if shareholders opt to take additional shares rather than cash.

What Is the Key Benefit of a Scrip Dividend for the Company