What does dividend policy mean?

Definitions for dividend policy
div·i·dend pol·i·cy

Here are all the possible meanings and translations of the word dividend policy.

Wikipedia

  1. Dividend policy

    Dividend policy is concerned with financial policies regarding paying cash dividend in the present or paying an increased dividend at a later stage. Whether to issue dividends, and what amount, is determined mainly on the basis of the company's unappropriated profit (excess cash) and influenced by the company's long-term earning power. When cash surplus exists and is not needed by the firm, then management is expected to pay out some or all of those surplus earnings in the form of cash dividends or to repurchase the company's stock through a share buyback program. If there are no NPV positive opportunities, i.e. projects where returns exceed the hurdle rate, and excess cash surplus is not needed, then – finance theory suggests – management should return some or all of the excess cash to shareholders as dividends. This is the general case, however there are exceptions. For example, shareholders of a "growth stock", expect that the company will, almost by definition, retain most of the excess earnings so as to fund future growth internally. By with holding current dividend payments to shareholders, managers of growth companies are hoping that dividend payments will be increased proportionality higher in the future, to offset the retainment of current earnings and the internal financing of present investment projects. Management must also choose the form of the dividend distribution, generally as cash dividends or via a share buyback. Various factors may be taken into consideration: where shareholders must pay tax on dividends, firms may elect to retain earnings or to perform a stock buyback, in both cases increasing the value of shares outstanding. Alternatively, some companies will pay "dividends" from stock rather than in cash; see Corporate action. Financial theory suggests that the dividend policy should be set based upon the type of company and what management determines is the best use of those dividend resources for the firm to its shareholders. As a general rule, shareholders of growth companies would prefer managers to have a share buyback program, whereas shareholders of value or secondary stocks would prefer the management of these companies to payout surplus earnings in the form of cash dividends.

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Numerology

  1. Chaldean Numerology

    The numerical value of dividend policy in Chaldean Numerology is: 8

  2. Pythagorean Numerology

    The numerical value of dividend policy in Pythagorean Numerology is: 7

Examples of dividend policy in a Sentence

  1. Rio Tinto:

    In light of the significant deterioration in the macro-economic environment and the resultant market uncertainty, the board believes that it is no longer appropriate to maintain the progressive dividend policy.

  2. Ben Lyons:

    We've been bemused for some time at the lack of share price depreciation in light of the deteriorating earnings profile for the group and we've been skeptical for many months about the dividend policy of the company, it's interesting to see how things have played out reasonably rapidly. Brazil was certainly one of the major catalysts.

  3. Edmund Shing:

    Before becoming positive on the sector, I would like to see them making efforts to improve productivity, adopt technologies like softwares to optimize logistics networks, cut labor costs and have a sustainable dividend policy, it's a very competitive market, growth prospects are limited and the barrier to entry is not very high. The danger for the market is that Amazon might replicate its experiment across Europe and other online companies such as eBay also launch their own delivery services to cut costs.

  4. Edmund Shing:

    Before becoming positive on the sector, I would like to see them making efforts to improve productivity, adopt technologies like softwares to optimise logistics networks, cut labour costs and have a sustainable dividend policy, it's a very competitive market, growth prospects are limited and the barrier to entry is not very high. The danger for the market is that Amazon might replicate its experiment across Europe and other online companies such as eBay also launch their own delivery services to cut costs.

Images & Illustrations of dividend policy

  1. dividend policydividend policydividend policydividend policydividend policy

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    either of two different animal or plant species living in close association but not interdependent
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