Ever since I started ton learn more about stick trading, I am putting more focus on companies that offer bonus share to their Investors. There are many companies in Indian stock market, that offers regular bonus issue to their share holder. Recently, some of the renowned companies likes of Reliance, Wipro, Vedanta and many others have declared bonus issue to every shareholders. They have their own criteria to decide the ratio for bonus issue. IT giant Wipro is a regular in this fields. In my opinion, Bonus shares are a boon to the investors.
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I extensively researching on companies who are fundamentally strong and issuing bonus share on regular basis. I started focusing after I noticed a surge in my stock holding of #Infosys. I remember I had pretty small holding but now it was increased after the companies declared bonus issue last time. Being away from stock market all these aware, I was not aware about this untill I noticed the sharp rise in my portfolio. A bonus share is considered a boon because it provides shareholders with additional shares at no extra cost*
I am not alone in the market to look for such companies. There are many identical 'long term' Investors who opt for companies offering bonus shares. In my opinion an Investors having a long term goal in the share market are the one who get more benefhitted with such offers. The bonus share, essentially increases their ownership stake without having to invest more money. This can potentially lead to higher returns if the company's value appreciates. This is especially attractive to long-term investors as it signifies a company's financial strength. Some of the key factors which makes investors choose companies offering bonus shares are:
By receiving bonus shares, investors automatically get a larger number of shares in the company, potentially leading to higher dividend payouts and capital gains if the stock price rises.
Unlike buying new shares, bonus shares are issued from the company's reserves, meaning investors don't need to spend any additional money to receive them.
When a company issues bonus shares, it increases the number of outstanding shares, making it easier to buy and sell the stock on the market.
Companies typically issue bonus shares when they are profitable and have substantial reserves, which can be seen as a positive sign for investors.
Bonus share is a more attractive option for the investors compared to cash dividends. However, having bonus share does not mean an immediate wealth creation for the investors. It should be noted that, while bonus shares increase the number of shares held in the portfolio, they do not automatically increase the overall value of the investment unless the stock price appreciates after the issuance.
But who does not loves to have some extra love at no extra cost. There are companies like KPI Green Energy as well as NMDC who are in process of allocating bonus share. They are in my radar and hope to get some in my portfolio before the record date I.e 27-Dec-2024