Bonus Shares: Definition, Difference with Dividends, and Company Examples

Jakarta, Pintu News – Bonus shares are one of the most common corporate actions taken by public companies, but are still often misunderstood by novice investors. Many think that bonus shares are the same as stock dividends, even though both have different characteristics and purposes. Understanding bonus shares is important so that investors do not misjudge their impact on investment value, both in the stock market and in the context of long-term portfolio planning.

Definition of Bonus Shares

Bonus shares are additional shares that a company distributes to existing shareholders without cash payment. These shares come from the capitalization of company reserves, such as agio shares or retained earnings, which are then converted into share capital.

In simple terms, the company does not distribute money, but rather increases the number of shares owned by investors. The total value of the shareholder’s investment remains essentially the same, even though the number of shares increases.

The main objective of issuing bonus shares is to strengthen the capital structure and increase the liquidity of the shares in the market. With the share price becoming more “affordable” after the additional shares, transaction interest is expected to increase.

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Difference between Bonus Shares and Dividends

The main difference between bonus shares and dividends lies in the form of returns that investors receive. Dividends are usually distributed in the form of cash (cash dividends) or new shares (stock dividends), while bonus shares come purely from the company’s internal capitalization.

Cash dividends provide immediate cash flow to investors, so they are often attractive to investors who are oriented towards regular income. Bonus shares do not provide cash, but increase an investor’s shareholding in the company.

From an accounting perspective, cash dividends reduce the company’s cash and retained earnings. In contrast, bonus shares only move reserve items to share capital without changing total equity. This is why bonus shares are often considered neutral to the fundamental value of the company.

Impact of Bonus Shares for Investors

The issuance of bonus shares causes the share price to adjust proportionally. For example, if an investor receives bonus shares at a ratio of 1:1, then the number of shares is doubled and the share price will theoretically drop by about 50%.

While it may look like a “price drop”, the total value of the investor’s investment does not change. However, the liquidity of the stock usually increases as the price per share becomes lower and easier to trade.

For long-term investors, bonus shares are often seen as a signal of management’s confidence in the company’s business prospects. However, bonus shares are not a guarantee of future share price increases.

Examples of Companies that Have Distributed Bonus Shares

Many global companies use bonus shares or similar schemes known as bonus issues or stock splits. Apple Inc. has conducted several stock splits to increase affordability for retail investors.

Tesla Inc. has also conducted a stock split that has a similar effect to bonus shares, increasing the number of shares outstanding without fundamentally changing the value of the company.

In the Asian banking sector, HSBC Holdings has issued bonus shares as part of its capital management strategy and value distribution to shareholders.

While the terms and mechanisms may vary slightly between countries, the basic principle is the same: increase the number of investor shares without any cash outflow from the company.

Are Bonus Shares Profitable?

Bonus shares do not automatically make investors gain or lose. The benefits are indirect and highly dependent on the company’s performance after the corporate action is taken.

If after the bonus shares the company’s performance improves and profits increase, the share price has the potential to rise again. Conversely, if fundamentals deteriorate, bonus shares are unable to withstand price pressure.

Therefore, investors should not use bonus shares as the sole basis for investment decisions. Analysis of financial performance, industry prospects, and corporate governance remain key factors.

Conclusion

Bonus shares are a corporate action in the form of additional shares distributed without cash payment that aims to strengthen the capital structure and increase stock liquidity. Unlike dividends, bonus shares do not provide direct cash flow to investors, but rather increase the number of share ownership.

For novice investors, understanding the difference between bonus shares and dividends helps avoid misperceptions about the value of an investment. Bonus shares should be viewed as part of a company’s strategy, not as an instant benefit.

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Reference

• Investopedia. What Is a Bonus Issue? Accessed February 9, 2026.