FACTORS THAT AFFECT DIVIDEND POLICIES

In this article we want to know how much should be paid out by a company to its shareholders in the form of dividends. What is the effect of dividend policy on share price? A financial manager’s dividend policy objectives are to maximize owner wealth while providing adequate financing for the company. A company’s dividend policy depends on many variables: company growth rate, profitability, earnings stability, maintenance of control, degree of financial leverage. Different types of dividend policies include: stable dividend-per-share policy, constant dividend payout ratio, a compromise policy, residual-dividend policy.