28 Aug , 2022 By : Kanchan Joshi
Bonus shares: It's a well known fact that a long term stock investor earns from appreciation in the portfolio stock price. However, he or she has some other sources of income as well. Announcement of bonus shares, interim and final dividends and buyback of shares are some hidden incomes that a stock investor enjoys in long term. so, while choosing the business model and its sustainability of its business, a long term stock investor is advised to look at the history of company's bonus share issue, dividend payment records, etc. Here we put forth an IT company that has issued bonus shares on five times since 2000. Name of that IT stock is Infosys.
Infosys bonus share history
Since 2000, Infosys has announced bonus shares on 5 occasions. Out of those 5 bonus share issues, the company announced bonus shares in 3:1 ratio in 2004. On rest 4 occasions, it has announced 1:1 bonus shares. Last time when Infosys shares trade ex-bonus was in September 2018. Prior to that, Infosys shares traded ex-bonus in June 2015 and December 2015.So, if a positional investor had invested in Infosys shares in the beginning of 2000, he or she should have got 3:1 bonus shares on its investment for once and 1:1 bonus shares on four times.
Impact on investment
If an investor had taken long term position in Infosys shares in the beginning of the year 2000, it would have first got 1:1 bonus shares bringing its cost price down by 50 per cent. After than it got 3:1 bonus shares in 2004 bringing down its cost price at one fourths of the existing cost price i.e. (50/4) or 12.50 per cent of the actual cost price. After that the investor got 1:1 bonus shares, that further brought down its cost price at 6.25 per cent of the actual cost price. After that the investor got two more bonus shares in 1:1 ratio that brought down its actual cost price at 1.5625 per cent of the actual cost price.
Taking cue from Infosys share price history, Infosys share price in the beginning of the year 2000 was around ?102 apiece. So, the actual cost price of the investor would have been ?1.59375 per share.
?1 lakh turns to ?9.58 crore
So, if an investor had invested ?1 lakh in this stock at the beginning of then year 2000, its ?1 lakh would have turned to around ?9.58 crore today (Infosys share price today on NSE is ?1526.80 apiece), provided the investor had remained invested in the stock throughout this period.