Dividend Policy





Dividend Policy 

Dividend policy is a financial decision in which company uses to decide how much it will pay to shareholders in form of dividends and how much to be plonked back into the firm.

* It depends upon investment opportunities .
* It involves relationship between cost and rate of return.
* Company dividend policy is an important consideration for investor .

-----> Types of Dividend Policy 

1} Regular dividend policy

* In this policy investor get dividend at usual rate 
* In regular dividend policy investor are generally retired persons or    economically.
* Investor involves who want to get regular income.
* These investor prefer a regular income without much risk. 

2} Stable dividend policy

* Here the payment of certain sum of money is regularly paid to the    shareholder  
* There are three types

a) Constant dividend per share : Company create reserve fund.

 b) Constant pay out ratio : It means the payment of fixed percentage of earning as dividend every year.

c) Stable rupee dividend plus extra dividend : Extra  dividend in the year when the company earn high profit.
3} Irregular dividend policy

* The company does not pay regular dividend to shareholders.
* The company uses this practice due to uncertain earning of the         company , lack of liquid resources , not so much successful              business.  

4} No Dividend : Due to requirement of fund for the growth of the company or for the working capital requirement.


 


 

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