Cash dividends and stock dividends/ Brief description, meaning / differences, Bonus share

Companies would pay two types of dividend that are cash dividend and stock dividend. The dividend is distributed in the form of cash that is called cash dividend when a company is piled up the  cash through ongoing business operations that would be offered as cash dividend. Stock dividend is unlikely to cash dividend the shareholders who would not get direct benefit; however, additional shares allocated to existing shareholders even though its underlying value will not change instead the number of shares will increase. 

Cash dividend

Cash dividends typically provide at the end of the fiscal year, sometimes few companies might provide along with quarterly results that are called Interim dividend. When a company has no more near term  financial obligation and earning potential profit while they may  willing to pay cash dividend to shareholders. 

A company is running their business with strong operating margin, little or no debt, and holds a large amount of cash - in this scenario, they would pay a dividend. In contrast, some stakeholders insist to pay dividend for example, public sector companies are regularly release dividend at every year because, the Indian govt is holding a large portion of stake  on them,  Govt is obligation dividend from public sectors so they have to release dividend around 80 percent of their net income. Therefore, they could not retain enough funds for the future growth that”s why their shareholders equity value is still remaining lower than private companies. 
 
As a growing company  would not pay a dividend or will be very little, because they want to utilize their income to reinvest into the same business for rapid growth, for example Microsoft did not pay a dividend for as long as 15 years, that company constantly invests their profit over and over again that made riches an Investors. 

Higher percentage dividend payout affects the long-term growth and inferior equity value appreciation because the net earnings will be retained on balance sheets' shareholders equity items. 
Moreover, dividends are taxable income on the other side stock dividends are not a tax liability generally long-term investors would like stock dividends rather than cash dividends. 

Stock Dividend

The companies would be willing to pay a dividend for two reasons. They tend to avoid tax on cash dividends and keep holding cash themselves. If a company has been piling up a cash over a long run from business operation thus, they need to pay cash dividends that cash out could affect investment opportunity,  in this situation, they will pay a stock dividend to shareholders which cash then transformed to shareholders equity account and can  avoid  tax.  usually , long-term investors who would like a stock dividend that appreciates the value of shareholders equity. Rather Higher cash dividends diluted EPS growth  moreover, companies unable to invest for further business expansion and meet a struggle during economic downturn. 
Very large established companies can not expand their operation further because already they would be dominating in the marketplace due to competitive advantage thus, like these companies may not be wrong in providing higher dividend yield because their products are strongly influencing consumers and hold a considerable customer base. 
Stock dividends will not change the underlying value of Equity but in the long haul makes a benefit to Equity holders.