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Dividend Decisions

Dividend Decisions

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Published by angelpooja

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Published by: angelpooja on Aug 04, 2009
Copyright:Attribution Non-commercial

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04/11/2013

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DIVIDENDDIVIDENDDECISIONSDECISIONS
It is one of the majorIt is one of the majordecision a financedecision a financemanager has tomanager has toundertake.this decisionundertake.this decisionrelates to the appropiationrelates to the appropiationof profits earned by aof profits earned by abusiness. A business hasbusiness. A business hastwo basic options intwo basic options inhandling the profitshandling the profitsearned which are: to retainearned which are: to retainthe profits earned(retainedthe profits earned(retainedearnings), or distribute theearnings), or distribute the
 
 
FACTORS AFFECTINGFACTORS AFFECTINGDIVIDEND POLICY DIVIDEND POLICY 
Financial requirement of business.Financial requirement of business.
Stability of dividends.Stability of dividends.
Capital market considerations.Capital market considerations.
Preferences of shareholders.Preferences of shareholders.
Bonus shares.Bonus shares.
Inflation.Inflation.
 
 
CLASSIFICATION OFCLASSIFICATION OFDIVIDEND POLICY DIVIDEND POLICY  
Regular dividend policyR
 
egular dividend policy
::payment of dividend is at the usualpayment of dividend is at the usualrate. It has certain benefits to giverate. It has certain benefits to givedividend on usual rate that are:dividend on usual rate that are:
2.2.
It crates confidence among theIt crates confidence among theshareholders.shareholders.
3.3.
It stabilizes the market value of It stabilizes the market value of shares.shares.
4.4.
It helps in long term financing andIt helps in long term financing andrenders financing easier.renders financing easier.

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