A more thorough explanation:

A stock dividend is a type of dividend that companies give to their shareholders or employees in the form of stocks instead of cash. This means that instead of receiving money, shareholders receive additional shares of the company's stock.

For example, if a company issues a stock dividend of 3%, a shareholder who owns 100 shares would receive three additional shares.

Stock dividends can be attractive to companies because they do not require them to spend cash. Shareholders may also prefer stock dividends because they can receive capital gains tax treatment, unlike cash dividends.

However, companies must follow the guidelines of their corporate charter when issuing stock dividends. Shareholders may also need to approve the issuance of stock dividends, especially if the dividend may have a significant dilution effect on the other stocks.

Overall, stock dividends are a way for companies to compensate their shareholders or employees while also retaining their cash reserves.