The amount of a stock dividend is generally the paid-up capital (“PUC”) of the issued share. Although PUC will sometimes be the same as the value of the share at the time it is issued, in many cases the PUC will differ from that value. Regardless, the PUC, not the value, determines the amount of the dividend for purposes of reporting the dividend as income.
If the stock dividend is received from a taxable Canadian corporation, it will be subject to the usual gross-up / dividend tax credit mechanism, which results in the dividend being subject to a lower rate of tax relative to other types of income such as interest.
Your cost of the issued share also is determined by the PUC of the share. The cost is then averaged out with the cost of your existing shares to determine your cost per share.