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  • Dividend Payout Decisions Fin Odf

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    Achyutanand Chaturvedi
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    Dividend payout decisions involve determining whether a firm should pay dividends to shareholders and if so, how much. There are differing views on the importance of dividend policy, with some arguing it is very important and others that it does not matter. Broadly, there are three perspectives: high dividends are good for investors by providing income; low or no dividends allow reinvestment that benefits investors; and dividends do not impact investors. One view is that high dividends signal a healthy cash flow and provide a consistent income stream for shareholders without requiring them to sell off investments.

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    Dividend payout decisions involve determining whether a firm should pay dividends to shareholders and if so, how much. There are differing views on the importance of dividend policy, with some arguing it is very important and others that it does not matter. Broadly, there are three perspectives: high dividends are good for investors by providing income; low or no dividends allow reinvestment that benefits investors; and dividends do not impact investors. One view is that high dividends signal a healthy cash flow and provide a consistent income stream for shareholders without requiring them to sell off investments.

    Copyright:

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    Download as ODP, PDF, TXT or read online from Scribd
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    12 views11 pages

    Dividend Payout Decisions Fin Odf

    Uploaded by

    Achyutanand Chaturvedi
    Dividend payout decisions involve determining whether a firm should pay dividends to shareholders and if so, how much. There are differing views on the importance of dividend policy, with some arguing it is very important and others that it does not matter. Broadly, there are three perspectives: high dividends are good for investors by providing income; low or no dividends allow reinvestment that benefits investors; and dividends do not impact investors. One view is that high dividends signal a healthy cash flow and provide a consistent income stream for shareholders without requiring them to sell off investments.

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    of 11

    DIVIDEND PAYOUT

    DECISIONS…

    By Achyutanand
    MBA IB 2nd sem
    What is dividend ? ? ????
    A dividend is a tool, used by firms, to
    pay to its shareholders…
    It may be in the form of cash (cash
    dividends) or in the form of stock,
    Does dividend policy
    matters???

    There are basically two views, one


    says “obviously yes”… and the other
    says, “no… it doesn’t”
    and the beauty of the subject is that
    the both contradictory views have a
    concrete rationale behind..
    The rightist, the leftist and
    the middle ones…
    On broad categorization we will come
    up with three different views…
    1. high dividend policies are good for
    investors.
    2. low dividend/no dividend policies
    are better in service of investors.
    3. dividends have no role for the
    investors.
    The rightist ideology..

    According to this school of thought, the


    high dividend payouts are better in the
    service of the investors as they
    provide good signal for the firms
    health and cash flow. Further, they go
    on to assert that since the investors
    wants a consistent source of income so
    it makes more than perfect sense to
    pay them regularly, rather than giving
    them pain to sell some part of their
    investment regularly.
    The rightist ideology…

    contd..

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