Dividend Policy Essays (Examples)

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Dividend Policy One of the
PAGES 12 WORDS 4864

Even their regular dividends were increased from 8 cents per share per quarter to 16 cents. This is quite a high rate of increase. This sort of announcements was also made by banks like Wachovia and Mellon, and consumer staples like Altria and Kraft. The attitude of the investors can be seen from the fact that the companies which have traditionally paid dividends have performed better in terms of share price than shares which do not pay good dividends, and this change has started from the beginning of 2004. Part of the change in attitudes of the companies may have come because of the reduction in taxation, which has been discussed already. (Dividends Are Back!)
Even in Europe, companies like Carrefour have increased their dividends, and this has led to improvements in market values of their stock. We are all aware that ordinary stocks do not guarantee the payment of….

Dividend Policy
What are the practical considerations which are likely to influence a firm's dividend policy? Does a firm's dividend policy matter?

Inside a firm's dividend policy there are a number of different factors that will have an impact upon: the amount and if one will be paid to shareholders. The most notable include: the growth rate of the company, credit agreements, earnings stability, maintaining control over the float, uncertainty, the ability of the company to receive financing from outside sources, financial leverage, age / size and possible tax consequences.

The Growth Rate of the Company

As far as the growth rate of the company is concerned, this will influence a firm's dividend policy by: requiring that a larger portion of their funds are used to support new opportunities in the future. This is because many growing companies may be in industries that are so new that it is not financially prudent to: pay….

Dividend Policy for Home Retail Group Plc and Yell Group Plc 2008, 2009, 2010
Once a company is profitable, the executives must determine what to do with the profits. The firm may continue to retain the profits, or it may pay out the profits to the owners/shareholders of the firm in the form of dividends. Once the firm decides on whether or not to pay dividends, it may establish a semi-permanent dividend policy, which may, of course, impact investors as well as the perception of the company in the global financial markets. See, hattacharyya, N. (2007). Dividend policy: a review, Managerial Finance, 33 (1), pp 4 -13.

What executives decide depends on the situation the company faces now, and is likely to face in the future. The policy also depends on the preferences of investors and potential investors. The most common dividend policies are as follows:

• Constant Dollar Dividend Policy

• Constant Payout….

It carries the balanced and effective cash flow in a long-term period and fosters the value of a firm. The crux is to render firms more adaptable to future changes of environments and realize value creation and continuous growth. Since value creation happens to be the initial stage of value management, therefore the main feature of a dividend policy founded on value management and rising it to realize the maximum of a firm's value, and foster enterprise's long-term development while considering the dividend policy. However dividend policy based on value management concentrates on the firm's long-term sustainable development, but does not give attention to the firm's short-term state increasingly. (Wang, 2006)
Discussion of stock valuation inexorably results to consideration of the role of dividends. A firm's fundamental position at this point is dependent on one's attitude toward (i) the impact of subdivision of the stream of income which supports the….

However, theoretically, they could experience a dramatic increase in the future, if the company is run well. According to the article in Forbes magazine entitled "A Progressive dividend policy," the final outcome for Progressive shareholders is likely to be an increase in profits during most ordinary, reasonably profitable years, although now dividends will be paid annually rather than quarterly (Carlson 2006, p.1). (This may also be seen as a negative by investors, who might want to pocket the dividends as soon as possible to reinvest and therefore make more money and capitalize upon their income in other ways).
What would change if Progressive Corporation used another dividend policy?

According to longtime investment analyst Charles Carlson (2006), dividend payments can take a variety of forms -- from increasing to omitting payments altogether, to paying special dividends during historic changes, to radically varying the schedule of payment. But the Progressive Corporation's strategy is….

Dividends
A regular cash dividend is paid out of the company's cash supply. The dividend can be at a fixed rate, or can be loosely tied to the company's net income. This is the most common form of dividend, and is paid under most circumstances. hereas a regular cash dividend is a recurring dividend, an extra cash dividend is a non-recurring dividend (Investopedia, 2012). This is a one-time dividend that is paid by the company. There is no expectation of a future extra dividend, in contrast to a regular dividend. A special dividend is the same thing as an extra dividend. The only slight difference is that something termed a special dividend is not necessarily going to be paid out of cash. The company may pay with shares or some other asset. Most commonly, however, this type of dividend will be paid out of cash.

A liquidating dividend is fundamentally different from….

Therefore, 'on balance, much empirical evidence supports the view of dividends as a signaling device'. There have been reported instances when the management has deliberately reduced the expected worth of the dividend, considered to be a strategic decision aimed at the improvement of the financial flexibility and growth prospects on long-term scale.
However the managers of the company have practiced such options, where they have 'used dividend actions to convey useful information, keeping in view the fact that dividend changes may not be perfect signals'. It has been agreed the by economic and strategic advisory of the company that 'dividend increases may be ambiguous signals unless the market can distinguish between growing firms and disinvesting firms, i.e., those with a lack of investment opportunities', therefore the Linear Technology has ensure that there is no compromise over the reputation of the company.

Several interesting patterns have been identified which are widely practiced….

Dividends Pay Out Policy
PAGES 2 WORDS 577

THE ELEVANCE OF PAYOUT POLICIES The elevance of Payout PoliciesIs dividend policy irrelevant?The dividend irrelevancy theory advanced by Modigliani and Miller argues that dividend pay-out has no effect on firm value and hence, dividend policy is irrelevant (Amidu, 2007). The theory argues that excess cash inflows could instead be reinvested into the company to stimulate future growth. Proponents of dividend pay outs argue that dividend-payment creates an impression of honesty among investors, it indicates that the company is generating real earnings, and minimizes the risk of overinvestment in projects with negative net present value (NPV) (Amidu, 2007). However, in my view, dividend policy is irrelevant for two major reasons.First, investors will usually create their own cash flows regardless of the companys dividend policy. Every investor expects a certain amount in dividends. If the pay-out policy is such that the investor receives a higher dividend than they expect, they can use….

Dividend Tax
PAGES 12 WORDS 3701

Dividend Tax
Capital gains and dividend taxes were both initiated in the early 1970's, by the Democratic Party. efore dividend taxes were enforced, the government made its money through higher aftertax yields, The dividend tax was originally supposed to be a progressive measure, so that the wealthiest paid correspondingly more than the poorest because they had benefited more. At this time, only the wealthy invested in stocks. This is no longer true. Most middle-class people today are investors in the market and they do not have the expensive accountants hired by the rich to shield their investments from tax.

Investing in the stock market has become far more widespread over the last two decades, as 84 million people - representing nearly half of all American households - owning stock. Tax-deferred investment tools such as 401(k) plans and individual retirement accounts (IRAs) have placed millions of Americans who make $60,000 or less per….

This balkanization is partially driven by the lack of integration between various segments of itself, and this is primarily a technological limitation. Yet the far broader and more difficult challenge in this regard is the segregating of knowledge not just for profit, but for lasting competitive advantage between nations. On the one hand there is the need for competitive differentiation in company's offerings, yet in others including the sharing of primary research in medicine and biomedical fields and stem cell research there is the ethical responsibility to share these insights gained to foster solutions to the world's most pressing medical problems. M. Van Alstyne and E. Brynjolfsson, researchers on the growth patterns and threat of Internet balkanization from MIT, remark in their conference paper from a 1996 conference that the balkanization of science is a significant threat. The two MIT researchers cite the studies they have completed showing how….


y encouraging shareholders to reinvest their profits, the company will improve its market position and hopefully yield a profit for its shareholders at a much higher margin in the future. Dividend reinvestment programs, because they usually require no brokerage fees, and allow stock to be purchased directly from the company, incentivize the purchase of more stock by current shareholders. They are an excellent way for shareholders to easily and effortlessly build their stock portfolio and small companies to encourage expanded ownership. Shareholders are given a potentially more lucrative way of slowly growing their earnings, rather than receiving a (relatively small, in the case of CAE) dividend.

Suggested changes: Suggestions

Currently CAE only allows Canadian investors to engage in the dividend purchase option. In the future, to expand foreign investment in the company, it could extend a similar policy to all shareholders, regardless of nation of origin.

Dividend reinvestment policies encourage long-term investment in….

Organization Dividends
Why company pay dividend to shareholders? Why dividends not really affect the shareholders? What the shareholders prefer low or high dividends? Why, Explain?

A company may opt to pay dividend to its shareholders in order to make considerable earnings of the corporate profits. State's law varies on how dividends ought to be paid. Dividends do not really affect the shareholders because it is not compulsory for a company to pay dividends. Kurtz & Boone, (2011) indicates that companies are under no legal obligation to pay dividends to shareholders. Shareholders prefer high dividends because they earn more profits from their shares on the company (Kurtz & Boone, 2011).

In term of Dividends and Signals, Asymmetric information -- managers have more information about the health of the company than investors. Changes in dividends convey information:

Dividend increases

• Management believes it can be sustained

• Expectation of higher future dividends, increasing present value

• Signal of a….


3.0 Dividends

According to the Miller-Modigliani Hypothesis, dividends do not affect value. This theory reasons that if a firm's investment policy doesn't change, the value of the firm cannot change with dividend policy. Therefore, investors should be indifferent to receiving either dividends or capital gains. but, the Miller-Modigliani Hypothesis has underlying assumptions that don't hold in the real work. It assumes there are no tax differences between dividends and capital gains and that companies do not use the excess cash they have as result of not paying the dividends for bad projects or acquisitions (Dividend policy). As these situations occur, there are distinct advantages and disadvantages of dividends

3.1 Advantages of Dividends

Stockholders may value regular cash payments that dividends offer and many may not face the tax disadvantages of dividends (discussed in the next session of this paper). and, unlike volatile stock prices firms generally do not change their dollar dividends frequently;….

This method is popular amongst firms in cyclical industries, as it allows them to curtail dividends during down cycles and reward their investors handsomely during up cycles.
The market analyzes stocks based on their returns, of which dividends are just one components. Dividend policy is considered to be a measure of a company's financial health, and a function of its business situation. The dividend is not considered important for investors in growth stocks, who view the company's business opportunities as being lucrative enough that free cash should be reinvested rather than paid out. Conversely, high dividend stocks, known as "widows and orphans" are considered to be companies in mature industries with steady income streams. The market's view is that there is little to be gained for such companies to reinvest their earnings. ecause of this, the opportunity for capital gains is limited, and investors will require the certainty of a….

Dividends Received Deduction, or DRD is a tax deduction that is typically received by a corporation on the dividends paid to it by companies in which it has some form of ownership. The logic behind this is to reduce the consequences of what might be triple taxation. This triple taxation would occur because the company paying the dividend does this with after-tax money, and the receiving company is subject to income tax on the money received as dividend income. If the company that receives the dividend decides to pay out to the shareholder, then there is more tax obligation, or a single variable being taxed three times. For example, if a company owns less than 20% of another company, it can deduct up to 70% of the dividends it receives.
DRDs are designed to complement a consolidated return, which allows affiliated corporations the ability to file a single consolidated return.….

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12 Pages
Term Paper

Business

Dividend Policy One of the

Words: 4864
Length: 12 Pages
Type: Term Paper

Even their regular dividends were increased from 8 cents per share per quarter to 16 cents. This is quite a high rate of increase. This sort of announcements…

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13 Pages
Essay

Economics

Dividend Policy What Are the Practical Considerations

Words: 4394
Length: 13 Pages
Type: Essay

Dividend Policy What are the practical considerations which are likely to influence a firm's dividend policy? Does a firm's dividend policy matter? Inside a firm's dividend policy there are a number…

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6 Pages
Essay

Business

Dividend Policy for Home Retail Group Plc

Words: 1729
Length: 6 Pages
Type: Essay

Dividend Policy for Home Retail Group Plc and Yell Group Plc 2008, 2009, 2010 Once a company is profitable, the executives must determine what to do with the profits. The…

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6 Pages
Term Paper

Economics

Dividend Policy Firm's Dividend Policy

Words: 2350
Length: 6 Pages
Type: Term Paper

It carries the balanced and effective cash flow in a long-term period and fosters the value of a firm. The crux is to render firms more adaptable to…

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4 Pages
Research Paper

Economics

Dividend Policy the Progressive Corporation

Words: 1147
Length: 4 Pages
Type: Research Paper

However, theoretically, they could experience a dramatic increase in the future, if the company is run well. According to the article in Forbes magazine entitled "A Progressive dividend…

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4 Pages
Essay

Business

Dividends a Regular Cash Dividend Is Paid

Words: 1228
Length: 4 Pages
Type: Essay

Dividends A regular cash dividend is paid out of the company's cash supply. The dividend can be at a fixed rate, or can be loosely tied to the company's net…

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15 Pages
Case Study

Economics

Dividends of the Linear Technology

Words: 4207
Length: 15 Pages
Type: Case Study

Therefore, 'on balance, much empirical evidence supports the view of dividends as a signaling device'. There have been reported instances when the management has deliberately reduced the expected…

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2 Pages
Essay

Accounting / Finance

Dividends Pay Out Policy

Words: 577
Length: 2 Pages
Type: Essay

THE ELEVANCE OF PAYOUT POLICIES The elevance of Payout PoliciesIs dividend policy irrelevant?The dividend irrelevancy theory advanced by Modigliani and Miller argues that dividend pay-out has no effect on…

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12 Pages
Term Paper

Economics

Dividend Tax

Words: 3701
Length: 12 Pages
Type: Term Paper

Dividend Tax Capital gains and dividend taxes were both initiated in the early 1970's, by the Democratic Party. efore dividend taxes were enforced, the government made its money through higher…

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12 Pages
Term Paper

Business - Management

Policy Formulation in a World

Words: 5010
Length: 12 Pages
Type: Term Paper

This balkanization is partially driven by the lack of integration between various segments of itself, and this is primarily a technological limitation. Yet the far broader and more…

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2 Pages
Case Study

Economics

CAE Review of Dividend Reinvestment

Words: 563
Length: 2 Pages
Type: Case Study

y encouraging shareholders to reinvest their profits, the company will improve its market position and hopefully yield a profit for its shareholders at a much higher margin in the…

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3 Pages
Essay

Business

Organization Dividends Why Company Pay Dividend to

Words: 1419
Length: 3 Pages
Type: Essay

Organization Dividends Why company pay dividend to shareholders? Why dividends not really affect the shareholders? What the shareholders prefer low or high dividends? Why, Explain? A company may opt to pay…

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4 Pages
Term Paper

Economics

Buybacks and Dividends Stock Buy-Backs

Words: 1216
Length: 4 Pages
Type: Term Paper

3.0 Dividends According to the Miller-Modigliani Hypothesis, dividends do not affect value. This theory reasons that if a firm's investment policy doesn't change, the value of the firm cannot change…

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3 Pages
Term Paper

Business

Payment of Dividends Companies Pay

Words: 956
Length: 3 Pages
Type: Term Paper

This method is popular amongst firms in cyclical industries, as it allows them to curtail dividends during down cycles and reward their investors handsomely during up cycles. The market…

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2 Pages
Essay

Economics

Dividends Received Deduction or Drd Is a

Words: 470
Length: 2 Pages
Type: Essay

Dividends Received Deduction, or DRD is a tax deduction that is typically received by a corporation on the dividends paid to it by companies in which it has…

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