After reading this article you will learn about Dividend Policy:- 1. Definition of Dividend Policy 2. Classification of Dividend Policy 3. Concepts. Definition of Dividend Policy: Dividend may be defined as divisible profit which is distributed amongst the members of a company in proportion to their shares in such a manner as is prescribed by the Memorandum and Articles of [...]
This article throws light upon the top ten factors for consideration of dividend policy. The factors are: 1. General State of Economy 2. Capital Market Considerations 3. Legal, Contractual Constraints and Restrictions 4. Tax Policy/Tax Consideration 5. Inflation 6. Stability of Dividends 7. Dividend Pay-Out (D/P) Ratio 8. Owner's Considerations 9. Nature of Earnings 10. Liquidity Position. Factor # 1. [...]
This article throws light upon the top three theories of dividend policy. The theories are: 1. Modigliani-Miller (M-M) Hypothesis 2. Walter's Model 3. Gordon's Model. Theory # 1. Modigliani-Miller (M-M) Hypothesis: Modigliani-Miller hypothesis provides the irrelevance concept of dividend in a comprehensive manner. According to them, the dividend policy of a firm is irrelevant since, it does not have any [...]