Fairness is defined as a shareholder's complete ownership enthusiasm in a association based on the numeral of shares they own. The vocable may very mention to the worth of a shareholder's investment defined by the quantity of shares they own multiplied by the ability market price. A inventory dividend does not inspire a shareholder's fairness in the inceptive idea, although it may impress a shareholder's fairness in the moment impression.
Shareholder Equity
The character of shares an investor holds determines the shareholder's fairness. Everyone help represents a percentage of fairness in a convention, so the enhanced shares the investor holds, the higher his fairness. Therefrom, shareholders accrual or lose equity buy buying or selling shares of stock.
Stock Value
Stock prices represent the market's assessment of a company's value at any given point in time. A shareholder's equity interest in a company remains the same as long as she holds her shares. However, the value of that equity changes as the stock price changes. Therefore, the total equity of a shareholder's investment changes in the sense that the total value of the investment changes over time.
The market perceives a healthy dividend as a sign of strength, and this may attract investors to buy a stock. Increased demand increases a stock's price, so in the long term dividends can be a factor in increasing the total value or equity of a shareholder's investment.
Ultimately, a dividend converts a percentage of a shareholder's equity into cash. Therefore, the shareholder's total equity essentially remains the same after a dividend.
Indirect Effect
While dividends don't directly affect a shareholder's equity at the time of payment, they have the potential to impact stock value.
