Financial Management

16

Dividend Policy

“When deciding whether to distribute earnings, either in the form of cash or stock, or to retain them for future growth, most companies strive to follow policies that meet the shareholders' needs for income or capital appreciation, and, at the same time, preserve the soundness of company finances.”

 

Alexander Robichek¹

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

1. Understand the core concepts, objectives and practices of corporate dividend policies.

2. Discuss the timing of the dividend declaration date, the ex-dividend date, the record date and the payment date.

3. Discuss the types of dividend payments and understand the concepts of share repurchase and stock split.

4. Appreciate the need for a stable ...