Corporate actions like dividends, bonus issues, and stock splits reshape portfolios overnight. For investors eyeing sustainable returns, decoding these isn’t optional—it’s fundamental to smart decision-making in India’s bustling equity markets.
Dividends are profit-sharing in action. A final dividend of ₹5 on a ₹100 stock credits your account post-record date. Interim dividends bridge quarters. Yields above 3-4% flag mature, cash-rich firms like PSUs or FMCGs. Reinvest via DRIPs for compounding magic.
Enter bonus issues: zero-cost share multiplication. A 3:1 ratio triples holdings from free reserves, adjusting NAV proportionally. No fresh capital raised, yet share count balloons, signaling reinvested earnings. Post-bonus, expect volatility as prices rebalance.
Stock splits prioritize liquidity. A 10:1 split shaves price from ₹5000 to ₹500, inviting small investors. Unlike reverse splits (consolidation for penny stocks), forward splits correlate with 20-30% short-term pops, per studies.
Strategic insights: Dividends suit income seekers; bonuses/splits favor growth chasers. Track ratios—high bonus frequency hints at undervaluation. SEBI mandates disclosures, so use screener tools like Tickertape or Moneycontrol.
Pitfalls? Ex-date price drops, phantom gains illusions. Taxes vary: LTCG on sales, DDT history lingers. Ultimately, these actions underscore company vitality. Arm yourself with knowledge to turn market ‘पाठशाला’ lessons into portfolio profits.