please help with a doubt on dividend policy

[monika gupta]

hello every1
plz help me out with d following 2 questions-
1-which of d 2 dividend policies- steady dividend or dividend fluctuating with earnings wud u recommend?
2- wud ur recommendation b different for a new company as distict from one which has been in existence for a period of more than 10 years?

its a 20 marks assignment nd m not able to find adequate stuff for d answer. wud b grateful if u can help.

 

[kartik]

Re: plz help wid a doubt on dividend policy

Looks like an incomplete question though here are the factors you would consider

How fast is the company growing/ expanding.

Whats the kind of liquidity the company has

How easy is it for the company to acquire funds

What are the shareholder expectations

How old is the company and how steep are its reserves and surplus

Industry growth rate, comparison to peers, year on year performance etc

will decide if the dividend should be fluctuating or steady.

Shareholders generally prefer a steady dividend.

Recommendations would be different again based on the above factors for a 10 yr old company and a new company.

 

[monika gupta]

Re: plz help wid a doubt on dividend policy

thanx for replying.i kno d question is a bit absurd but sir gave it lyk dis only.m not able to find d exact answer newhr , vil b writing dese points only.
thanx again

 

[rosemarry2]

hello every1
plz help me out with d following 2 questions-
1-which of d 2 dividend policies- steady dividend or dividend fluctuating with earnings wud u recommend?
2- wud ur recommendation b different for a new company as distict from one which has been in existence for a period of more than 10 years?

its a 20 marks assignment nd m not able to find adequate stuff for d answer. wud b grateful if u can help.

Hello buddy,

Here I am up-loading Theory on Dividend Policy, please check attachment below.