• guide to residual dividend policy

    Residual Dividend Policy

    What is Residual Dividend Policy? The residual dividend policy refers to the dividend policy where a company can distribute or can not distribute its earnings as dividends. This dividend policy suggests that the corporate firm should retain earnings as long as it has investment opportunities. Under this dividend policy, the dividend distribution to the company’s shareholders is based on the future investment opportunities and a debt-equity ratio of the firm. Understanding Residual Dividend Policy Residual dividend policy suggests that a firm should retain its earnings as long as it has investment opportunities that promise a higher rate of return than the shareholder’s required rate of return. In other words, under…

  • dividend payment procedures

    What are the Procedures of Dividend Payment?

    Dividend Payment Procedures The dividend payment procedures refer to decisions and operating guidelines for executing the dividend decisions. The procedures of dividend payment of a corporate firm can be outlined as follows: Dividend Payment Procedures includes: Declaration date Date of Record Ex-dividend date Payment date # Declaration date The board of directors of the company announces that a specified amount of dividend will be paid to the stockholders. It is paid to the stockholders who are on the company’s record on the specified future date. The date on which directors meet and announce the dividend is called declaration date. Generally, the dividend is announced as a percentage on the par…

  • factors affecting dividend policy

    Factors Affecting Dividend Policy

    Factors Affecting Dividend Policy or Factors Influencing Dividend Policy of a Firm A firm’s dividend policy is affected by various factors. Some factors affect the amount of dividend and some others affect types of dividend. Factors affecting dividend policy are also called in various ways. Such as determinants of dividend policy, factors influencing dividend policy, factors of dividend policy, etc. but answers are the somehow same for those. The major factors affecting dividend policy are as follows: Legal Requirements (Legal Provisions) Firm’s Liquidity Position Repayment Need Restrictions Imposed by Bondholders and Preferred Stockholders Investment Opportunities Stability of Earnings Desire for Control Access to the Capital Markets Stockholders Individual Tax Situation…

  • types of dividend policy

    Types of Dividend Policy

    Types of dividend policy Dividend policy is a policy determined by the company to pay out its earnings as a dividend to its shareholders. There are basically four types of dividend policy, they are as follows: Stable dividend policy or Constant dividend policy Stable dividend payout policy or constant dividend payout policy Regular plus extra dividend ratio Residual dividend policy Let’s describe these types of dividend policy individually plus detail explanation, # Stable/ Constant dividend policy Under the stable dividend policy, dividend per share is fixed. Also, under this policy dividend per share should be constant. This policy may be stated as ‘Rs. 2 dividends per share’ or ‘Rs. 3…

  • what is dividend policy?

    Dividend Policy

    What is dividend policy? Dividend policy is a policy determined by the company to pay out its earnings as a dividend to its shareholders. Determining the part of earnings to be distributed as dividends is a key factor that leads the firm’s stockholders and potential investors to determine the firm’s stock value in the market place. The firm should establish and implement an effective dividend policy that leads the firm to stockholders wealth maximization. Understanding of Dividend Policy Dividend policy is concerned with determining the proportion of a firm’s earnings to be distributed in the form of cash dividend and the proportion of earnings to be retained. It is an…

  • what is dividend

    Dividend – Learning

    What is Divided? Dividend refers to the portion of net income paid out to shareholders. It is paid to shareholders in cash or stock for making investment and breaking risks. A company may pay full its earnings as dividends or half or not it depends on the company circumstances. The dividend is paid when a company is in profit or surplus. When a company paid cash out of its earnings to shareholders is known as a dividend paid and remaining is known as retained earnings. A dividend is paid at a fixed price per share as stated in the decision of the company. Advantages and Disadvantages of Dividend Paying it,…