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What is the difference between a stock dividend and a stock split?
A stock split is when a company issues at least two new shares for every existing share an investor currently holds. A stock dividend is when a company uses the money that would be paid as a cash dividend to purchase additional common shares for the shareholder. Those companies that are wanting to grow will want to keep any cash they have to invest in the company, which is why stock dividend is issued. When a company feels its stock is above the popular price range for their stock, the company will stock split (Ward, 2019).
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