Bonus Shares: It is a well-known fact that a long-term stock investor portfolio earns from appreciation in stock price. However, he also has some other sources of income. Declaration of bonus shares, interim and final dividends and buyback of shares are some of the hidden income that a stock investor receives over a long period of time. Therefore, while selecting the business model and the sustainability of its business, a long-term stock investor is advised to look at the company’s bonus share issuance history, dividend payment records, etc. Here we have placed an IT company which has issued bonus shares. Five times since 2000. The name of that IT stock is Infosys.
Infosys Bonus Share History
Since 2000, Infosys has announced bonus share On 5 occasions. Out of those 5 bonus shares, the company declared bonus shares in the ratio of 3:1 in 2004. On the remaining 4 occasions, it announced 1:1 bonus shares. The last time Infosys shared an ex-bonus was in September 2018. Earlier, Infosys shares had traded ex-bonus in June 2015 and December 2015. He should have got 3:1 bonus shares for one time and 1:1 bonus shares on four occasions on his investment.
impact on investment
If an investor had taken a long-term position in Infosys shares in early 2000, he would have received the first 1:1 bonus shares, which would have reduced his cost price by 50 per cent. Subsequently, in 2004, it received 3:1 bonus shares, bringing its cost price down to one-fourth of the current cost price, ie (50/4) or 12.50 per cent of the actual cost price. The investor then received 1:1 bonus shares, bringing its cost price further down to 6.25 per cent of the actual cost price. Thereafter, the investor got two more bonus shares in the ratio of 1:1 which brought his actual cost price to 1.5625 percent of the actual cost price.
Taking cues from the share price history of Infosys, the share price of Infosys at the beginning of the year 2000 was around 102 per. So, the investor’s actual cost price would have been 1.59375 per share.
1 lakh turns into 9.58 crore
So, if an investor had invested 1 lakh in this stock at the beginning of the then year 2000, its would have been around 1 lakh 9.58 crores today (Information share price today on NSE is 1526.80 each), provided the investor remains invested in the stock during this period.
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