Types of dividend policies:

1) On the idea of firm’s general perspective: the shape of dividend policy during which dividend
is paid once a year from initial year of operations referred to as regular dividend if the dividend
is payed at fastened quantity once a year or intensive of earnings just in case of stock are called
stable dividend if the dividend share is fastened consistent with quantum of earnings and variety
of common stock within the year is termed fastened payout quantitative relation. If dividend is
paid within the type of money or common stock of different companies hold by it or reworking
retain earnings into bonus shares are referred to as property dividend or bonus share dividend.

2) On the idea of investigation : Dividend policy on the base of nature of trade like sugar trade,
industry, cars, textile trade they're divided into three components large dividend policy, a lot of
or less fastened dividend policy, Unreliable dividend policy

3) On the idea of the stability of dividend: Stable dividend per share, stable share of web
earnings, stable dollar dividend and dividend, dividend as fastened share of market price.

Forms of Dividend: dividend normal is distribution of profit earned by a joint stock firm among
shareholders are paid in money however there are different styles of dividend that are shortly
describe as certificate dividend, debenture dividend, dividend and property dividend

Factors that affect payout policy

Earnings

Dividend Cashflows

Payout Policy
Debt Size

Growth Investment Largest

opportunity shareholders
Introduction with respect to elements:

Our investigation is regarding components of dividend policy of public registered companies in

Pakistan stock market. we have a tendency to took following independent components that result
dividend policy of any firm.

• Dividend (Dividend per share)

• Earnings (Earnings per share)

• Cash flows (Cash flow per share operations)

• Debt (Total liabilities / total assets)

• Size (Logarithm of total assets)

• Growth (Sales growth in current period rather than previous)

• Investment opportunity (Retained earnings / total assets)

• Largest shareholder (Percentage shares owned by largest shareholder)

The first variable that determines the result of dividend per share on dividend policy of any firm.
Dividend per share (DPS) is that the term refers because the ad of dividends that is issued by
firm for all normal shareholders on per share basis. The DPS is calculated by dividing the full
dividends paid over an amount of your time by the amount of outstanding common stock issued.
A firm may derive its DPS using the dividend paid within the most up-to-date amount, that is
additionally wont to calculate the dividend yield and helps to see the dividend policy consistent
with recent amount dividend position. The second variable which is able to facilitate United
States of America to see the dividend policy is earning per share. EPS is generally thought-about
because the single most vital variable to determinate a share's worth. Earnings per share (EPS)
tells a couple of firm's profitable. EPS represents a firm's net income assigned to every share of
its stock. There are two components of earning per share. the primary one is maintained earnings
and also the second is Dividend per share. it's merely obvious that if a firm’s earning per share is
higher the dividend per share even be higher. So, that’s why earning per share confirm the
dividend policy on the idea of earnings of the firm. The third part that effects a firm’s dividend
policy is that the income per share. income per share may be a money quantitative relation that
measures the in operation money flows due to every share of stock. Its effects corporate
dividends determinants. in operation cash flow per share helps the managers to see whether or
not dividend ought to pay or not on the idea of money influx and outflow. The fourth
components that confirm the dividend policy is Debt. Here, during this analysis, we are going to
regard as a firm’s debt to equity quantitative relation. Debt to equity quantitative relation tells
regarding the debt and equity of any firm. As debt to equity quantitative relation higher, higher
are going to be the firm’s risk and liabilities. So, this quantitative relation has nice role to form
the dividend policy. A firm’s size also helps the managers to see dividend policy. companies are
available numerous sizes and shapes, and that they may well be single-owner enterprises or large
MNCS with several shareholders cutting across geographical boundaries. The management of
every firm ordinarily makes dividend policy, however the scale of the firm will play a crucial
role in dividend policy decision. A firm’s dividend policy is decided by the preferences of the
firm’s stockholders. giant investors like better to invest in large companies as a result of it helps
to lower their group action prices. However, several large institutions like to choose better value
to a lot of highly favor pay more dividend to their stockholders and little firm’s that is owned by
people, do not. It means firm size explains the choice of whether or not to pay dividends. The
firm’s sales also are an excellent determinant of dividend policy. Here, we have a tendency to
considered sales growth to see dividend policy. Higher dividends are paid to shareholders once
earnings increase (sales growth), that refers to sensible firm’s performance. Investment chance in
different words future money requirements for added capital have an excellent result whereas
creating dividend policy. A firm having profitable investment opportunities is even in retentive
the earnings. However, a firm with no internal or external capital necessities ought to operate for
the next dividend. it's calculated by dividing the firm’s maintained earnings with total assets. The
last variable which is able to facilitate United States of America to see a firm’s dividend policy is
largest shareholders (percentage share owned by largest shareholder). A firm taking an even
bigger a part of shares owned by large shareholders implies bigger management over the
management, that during a manner pressures the management to make sure the shareholders’
wealth is maximized by manner of distributing higher dividends.