The dividends are distributed according to your holdings on the ex-dividend date.
If a stock split occurs before the ex-dividend date, the dividend value will be adjusted proportionally to the split.
Stock splits do not change the total amount of dividends paid by a company. 👌
Example:
If a company pays a total of $1 million in dividends per year and has 10 million shares outstanding, the dividend per share would be $0.10. In the case of a 2-for-1 stock split, the number of shares outstanding would double to 20 million, but the total amount of dividends paid by the company would remain the same at $1 million per year. Therefore, the dividend per share would be halved to $0.05.
In other words, a stock split reduces the stock price and increases the number of shares outstanding, but it does not affect the total value of the company or the amount of dividends paid to shareholders. However, a stock split may affect the perceived value of the stock and attract more investors, potentially leading to increased demand and a higher stock price over time.
Remember, only shareholders on the ex-dividend date are eligible to receive the dividend payment. You won't receive the dividend if you buy shares after the ex-dividend date.