Types of dividend policy, Financial Management

TYPES OF DIVIDEND POLICY

1. Regular dividend policy: Payment of dividend at standard rate is known as regular dividend policy.

2. Stable dividend policy: Payment of fixed minimum amount of dividend regularly is known as stable dividend policy.  This may take the form of one of the following forms.

Constant dividend per share:  Fixed dividend per share is paid irrespective of earnings year after year and a reserve for dividend equalization is created to cover the fluctuations in earnings.

Constant Payout Ratio (P/O):  Under Constant Payout Ratio policy, a predetermined percentage of earnings is paid as dividend every year.

Stable rupee dividends plus extra dividend:  Under Stable rupee dividends plus extra dividend technique, a constant low dividend per share is paid, with an extra dividend in years of high profits.

3. Irregular dividend policy:

Under Irregular dividend policy, dividend payment is irregular.  The dividend policy depends on so many other factors which may have a direct impact on the availability of funds in the company.

4. No dividend policy:

Under No dividend policy, the company has a policy of not paying dividend to any share holder.

Posted Date: 10/16/2012 1:19:57 AM | Location : United States







Related Discussions:- Types of dividend policy, Assignment Help, Ask Question on Types of dividend policy, Get Answer, Expert's Help, Types of dividend policy Discussions

Write discussion on Types of dividend policy
Your posts are moderated
Related Questions
Question 1 What is Depreciation? Question 2 What are the elements of an accounting system? Question 3 How do you prepare Flexible Budget? Question 4 Briefly explain

Explain the bird in the hand theory of cash dividends. The bird in the hand dividends theory state that dividends received now are better than a promise of future dividends.  U

Predicting Cross-Sectional Returns If the market is assumed to be efficient, all securities should lie along the security market line that relates the expected rate of return t

What does an investment banker do when underwriting a new security issue for a corporation? While underwriting a new security issue an investment banker buys it and after that re

Suppose the government wants to increase farmers’ incomes.  Why do price supports or acreage limitation programs cost society more than simply giving farmers money? Price acrea

Suppose that the Fed buys $1 million of bonds from the First National Bank. If the First National Bank and all other banks use the resulting increase in reserves to purchases bonds

Advantages of ARR: It is simple to calculate and easy to catch. With the help of this technique, direct comparisons among proposed projected of varying lives with no bu

ARR AND PAYBACK (a) Accounting rate of return (ARR) is a computation of the return on an investment where the annual profit prior to interest and tax is expressed as a percen

Why do financial managers calculate the marginal tax rate? Financial managers make use of marginal tax rates to estimate the future after-tax cash flows from investments. As th

Illustration  The monthly yield of a mortgage backed security is 0.75%. Find out the annual yield for this security. Solution Annual yield = 2 [(1 + 0