Is a scrip dividend better than a cash dividend?

It depends on amortization. With buyback and cancellation it is a flexible, often tax-efficient way to reinvest. Without it, the "dividend" is partly paid through shareholders' own dilution.

What happens if I do not choose an option?

Each program defines a default, usually receiving new shares. Watch the deadlines: the election window typically lasts about two weeks.

Does a scrip fit an income strategy?

If you need the cash, always choose the sale back to the company. If you are in the accumulation phase, taking shares can make sense — while monitoring dilution and your average cost.

Scrip Dividend | Wiki Por Dividendos

A scrip dividend (or flexible dividend) is a form of shareholder remuneration where the company lets you choose how to be paid: in cash or in new shares. Technically, the company hands out free allotment rights; you can use them to subscribe new shares, sell them back to the company (receiving a fixed amount, like a traditional dividend) or sell them on the market.

The format has been especially popular among Spanish blue chips: Santander, Iberdrola, Telefónica and ACS have all used it for years, sometimes under their own branding such as Iberdrola's "Flexible Remuneration".

How it works in practice

In each scrip round you receive rights in proportion to your shares and choose between three options:

Sell the rights back to the company at a guaranteed price: equivalent to receiving the dividend in cash.
Receive new shares: you increase your position without cash changing hands.
Sell the rights on the market: you receive the market price of the right, which may differ from the guaranteed one.

Scrip Dividend

How it works in practice

The fine print: dilution

Why companies use it

Tax treatment (orientative)

Frequently asked questions