Dividend of groww that can b policy.pptxj

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1. Dividend policy goals By Prabhakar singh

2. What Is a Dividend Policy? A dividend policy is a policy a company uses to structure its  dividend payout . Put simply, a dividend policy outlines how a company will distribute its dividends to its shareholders. These structures detail specifics about payouts, including how often, when, and how much is distributed. There are three different types of dividend policies—stable, constant, and residual—each with its own benefits. Dividend policies aren't mandatory, as some companies choose not to reward shareholders with dividends.

3. How a Dividend Policy Works Some companies choose to reward their  common stock  shareholders by paying them a  dividend . A dividend is paid on a regular basis and usually represents a portion of the profits that these companies earn. This gives shareholders a regular stream of income, which is why dividend-paying stocks are a favorite for some investors.

4. Types of Dividend Policies Stable Dividend Policy A stable dividend policy is the easiest and most commonly used. The goal of this policy is to provide shareholders with a steady and predictable dividend payout each year, which is what most investors seek. Investors receive a dividend regardless of whether earnings are up or down. The goal is to align the dividend policy with the long-term growth of the company rather than with quarterly  earnings  volatility. This approach gives the shareholder more certainty concerning the amount and timing of the dividend. Constant Dividend Policy The primary drawback of the stable dividend policy is that investors may not see a dividend increase in boom years. Under the constant dividend policy, a company pays a percentage of its earnings as dividends every year. In this way, investors experience the full  volatility  of company earnings. If earnings are up, investors get a larger dividend and if earnings are down, investors may not receive a dividend. The primary drawback to the method is the volatility of earnings and dividends. It is difficult to plan financially when dividend income is highly volatile.

5. Refreence https://www.investopedia.com/terms/d/dividendpolicy.asp#:~:text=Stable%20Dividend%20Policy,-A%20stable%20dividend&text=Investors%20receive%20a%20dividend%20regardless,than%20with%20quarterly%20earnings%20volatility .

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