Dividend Payment Factors
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What external factors affect the dividend policy?
❶Can you borrow against the paid up dividend additions on a life insurance policy? The undistributed part of the profit is known as Retained earnings.Capital Needs
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Income stability is one of the top factors in determining dividend policies. Specifically, established companies with stable, predictable income streams are more likely to pay dividends than companies with growing or volatile income.
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In some cases, control of the firm may be a factor to consider when establishing dividend policy. Suppose a fairly substantial proportion of the firm is owned by a controlling group, and the remainder of the stock is publicly held.
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Factors determining the dividend policy of a company are as given below: Liquidity: For paying the dividend, a company will require access to cash. Dividend Policy Dividend policy is one of the most important factors that attract the investors toward a company. Dividend policy is simply concerned with determining the portion of firm’s earning into dividend and retained earnings in the firm. A firm’s dividend policy is influenced by the large numbers of factors.
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This also affects the dividend policy to the extent to which the firm has access to the capital market In other words, if easy access to the capital market is possible whether due to financially strong or, big in size, the firm in that case, may adopt a liberal dividend policy. FACTORS AFFECTING DIVIDEND POLICY Finance Management Sharon M MBG SHARON M, INSTITUTE OF MANAGEMENT IN KERALA 2. DIVIDEND POLICY “Policy that a company uses to decide the amount to be paid to the shareholders in form of dividends” A company in growth may either choose to pay dividend or may .