Stock dividends give a company a way to increase the number of shares outstanding and bump up the number of shares owned by each shareholder. But dividends don't change the value of what each shareholder owns. The company is still worth the same amount, but it's just divided over a larger number of shares. For example, if a company worth $100,000 has 10,000 shares outstanding, each share is worth $10. If the company gives a 10 percent stock dividend, a shareholder will own 110 shares for every 100 previously owned. However, each share will only be worth $9.09.
Look up the total number of shares outstanding immediately prior to the dividend. You can find this information in the company's annual report, also called a 10-K, or quarterly report, also called 10-Q. The U.S. Securities and Exchange Commission makes these available online.Step 2
Calculate the number of new shares issued in the stock dividend by multiplying the percentage of the dividend by the number of shares outstanding. For example, if the company has 300,000 shares outstanding and grants a 2 percent stock dividend, multiply 300,000 by 0.02 to find that 6,000 new shares have been issued.Step 3
Add the new shares issued as a result of the stock dividend to the shares already outstanding to find the number of shares outstanding after the stock dividend. In this example, add the 6,000 new shares to the 300,000 existing shares to find 306,000 shares are outstanding after the stock dividend.
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."