Confusion over scrip dividend treatment

Differing views by IMA and FTSE EMEA Indices Committee deemed 'flawed strategy'

A conflicting stance on the treatment of scrip dividends from the IMA and FTSE guidelines is confusing the market and prompting managers to reconsider holding banking stocks as bonus issues. A scrip dividend involves the issue of additional shares in lieu of a cash dividend. The FTSE EMEA Indices Committee has issued guidance that these should be treated as "bonus issues and are not included in dividend or yield calculations." This means a UK stock just paying a dividend in scrip form will have a zero dividend yield assigned to it within the FTSE All-Share Index. This compares with ...