A dividend policy details how profits are distributed to shareholders or reinvested for growth. It impacts company stability, investor income, and investment strategies.
Dividend policy aims to balance payouts, signal profitability, support growth, ensure stability, and attract investors with varied preferences.
Types of dividend policies: Stable, Constant, and Residual. Each type has distinct advantages and disadvantages based on company objectives.
Dividend policy showcases a company’s stability and profitability, attracting investors by reflecting financial health. It aids in financial planning and stabilizes volatile markets.
Factors include financial stability, liquidity, shareholder preferences, and market conditions. Consistent earnings and cash reserves enable stable dividend payments.