Constant amount per share or fixed d.p.s., Finance Basics

Constant amount per share or fixed D.P.S.

1. The DPS is fixed in total amount of irrespective of the earnings level. These generate certainty and are consequently preferred via shareholders who such have a high reliance on dividend income.

2. It protects the firm from durations of low earnings with fixing, DPS at a low level.

3. This policy treats all shareholders as preferred shareholders with giving a fixed return. The DPS can be increased to a higher level if earnings appear relatively permanent and sustainable.

Posted Date: 1/31/2013 2:22:56 AM | Location : United States

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