Three Characteristics Of Dividend Policy

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13.4 Characteristics of Dividend Policy These three characteristics of dividend policy which usually used in firm to determine their share value are Constant-Payout-Ratio Dividend Policy, Regular Dividend Policy, as well as Low-Regular-And-Extra Dividend Policy. Firstly, the Constant-Payout-Ratio Dividend Policy is one of the features in dividend policy which frequently used by certain company. It is one of the easiest methods for a company to create a percentage of incomes that should be paid in every period. However, this policy faces some difficulties in their implementation. For example, if the company’s incomes fell or deficit in some period then it will affect to the dividend, it might be alight or not exist. The stock of company can…show more content…
Basically, this feature is referring on the payment of fixed-ringgit dividend in every period. This policy present to owners that the company is good which mean they only provide perfect information, so it will reduce the owner’s anxiety. There are many company used this feature because in the end they will get a positive result. It is proven based on the growth in incomes will increase the regular dividend. Since this policy is used, it is very rare to see the decrease in dividend. Therefore, this characteristic is recommended to all…show more content…
All these forms can be known as substitute to cash in paying the dividend to the shareholders. Even though, there are few different in each forms but they still have same effect on the firm. First and foremost, a stock dividend is one of the other forms of dividends. It is known as a payment in form of stock to the existing shareholders. It is work by the company paid stock dividend as a substitute for or an additional fund to cash dividend. Even though, stock dividend does not have an original value at all, but the company still work hard to present something that the shareholders may not see before this. Thus, by the company’s effort, it will make the shareholders appreciate their work hard and value it. Next, a stock split is another form of dividends that available in this part. Stock split looks alike with stock dividends which have a consequence on share price of the company, though it is not a types of dividend. It is usually used to decrease the market price in stock of the company. When the company has the desire to arouse market activity and increase the market share, they should use this stock split before issued the new shares. Therefore, the growth in the number of shares outstanding, the decrease the stock’s per share par

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