RE: Cancellation of Scrip Dividend Option6 Jul 2023 16:15
Hi
A scrip dividend is functionally the same as (1) taking the dividend in cash and (2) reinvesting that cash dividend (minus taxes) into newly-issued shares of the company.
If you would be happy to see the company announce a capital increase tomorrow at a price around the current share price, then you should view a scrip dividend as a good option to offer to shareholders.
If you think that the share price is likely undervalued at the moment (acknowledging this really depends on how rates will evolve), then it is currently a wrong time to issue new shares or offer a scrip dividend.
The company is, I assume , in the latter camp. I view it as a sign of strength. (1) They have conviction their share price is below fair value and (2) There are not desperate for cash.