What types of dividend provide tax saving most?
A dividend is a portion of a company's value distributed by the board of directors. Dividends are intended to return money to a company's owners. Dividends are classified into two types: cash and equity.
As long as there is no cash option, share dividends are regarded to be superior to cash dividends. Companies who pay share dividends provide their shareholders the option of maintaining their earnings or converting it to cash whenever they want; a cash dividend gives no other alternative. This is not to say that cash dividends are bad; they just lack options. A shareholder, however, might still reinvest the cash dividend earnings into the company through a dividend reinvestment plan.
Option (2) is the Correct option i.e. Share dividend