Analysis of Dividend Policy (A Comparative Study of Selected Public and Private Sector Companies)

The term dividend refers to the portion of the profits (after tax) which is distributed among the owners or share holders of the firm and the profit which is not distributed is known as retained earnings. A company  may  have  preference  share  capital as  well  as  equity  share capital and dividend may bepaid on both types of capital. However, there is as such, no decision involved as far as the dividend payable to preference share holders is concerned.A firm’s dividend policy incorporates all aspects of payout, such as the rate of dividend, stability, timing of payments, methods of payment, etc. Formulating a dividend policy that covers each of these important areas requires careful consideration not only of the needs of the firm but also of the requirements of the shareholders. The dividend policy may also be determined by factors that are entirely economic.