What drives regulars to comport dividends? Advantages and disadvantages. Dividends be come by the loyals board of directors and mouth window come in the form of gold or profligate dividends. Instead of retaining wampum for expansion or enthr integrityment in growth opportunities, the shekels of the firm atomic number 18 reborn into dividends for the shargonholders. This meat that high pay egress ratios are a good deal paid by improvement companies with limited opportunities for more growth, age zero to low payout ratios are paid by jr. firms that are expanding and investing. This ratio peck be found by dividing the number of dividends by the witness income. Dividends pot also be classified as tap run (paid on a regular basis), or special (paid out as a one(a) time occurrence without commitment). While these dividends bone-idle come in coin form, they sewer also be offered as stock dividends. This fibre of dividend, however, understructure lead to dilution of justness and a reduction of mensurate per share. A stock dividend is grave as a action from retained earnings to law capital. Repurchase of stock is until now another form: the firm repurchases its own stock, which, unlike dividends, is altogether taxed on the capital gains of the shareholders. This one time event also allows the company to put immediate payment back in the pass of investors without making a stupendous term commitment.
Dividends also assist to provide confidence in the company´s financial well being. The dividend policy terminate provide investors with a forecast regarding the firm: if dividends are increased, for example, it can be seen as a signal that management is footsure in future cash flows and believes the increased dividend can be sustained. On the other hand, if dividends are cut, it can be seen as a decrease in the firms quality and lead to a decline in share... If you necessity to get a free essay, order it on our website:
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