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Understanding Dividend Policies and Types

This document discusses dividend policy including the meaning of dividends, forms of dividends such as cash, stock, scrip, bond, and property dividends. It also covers types of dividend policy including regular, irregular, stable, and no dividend policies. The document then discusses determinants that influence dividend policy including stability of earnings, financial policy, liquidity, competitors, past rates, ability to borrow, growth needs, tax position, and legal requirements.

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10 views5 pages

Understanding Dividend Policies and Types

This document discusses dividend policy including the meaning of dividends, forms of dividends such as cash, stock, scrip, bond, and property dividends. It also covers types of dividend policy including regular, irregular, stable, and no dividend policies. The document then discusses determinants that influence dividend policy including stability of earnings, financial policy, liquidity, competitors, past rates, ability to borrow, growth needs, tax position, and legal requirements.

Uploaded by

Anonymous d3CGBMz
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Unit 4

Dividend policy
Meaning of Dividend:

• Dividend is “that part of profit distributed among share holders which includes normal
rate of interest plus a return for the risk assumed”.

Forms of dividend:

• Cash Dividend: Most companies pay the dividends in the form of cash
• Stock Dividend: A Stock dividend represents a distribution of shares in lieu of or in
addition to the cash dividend.
• Scrip Dividend: In the form of promissory notes.
• Bond dividend: In the form of bonds or bills of exchange
• Property dividend: In the form of assets.
Types of dividend policy:
• Regular dividend policy
• Irregular dividend policy
• Stable dividend policy
• No dividend policy
Determinants of dividend policy:

• Stability of earnings
• Financial policy of the company
• Liquidity of funds
• Dividend policy of competitors
• Past dividend rates
• Ability to borrow
• Growth needs of the company
• Tax position of the shareholders
• Legal requirements
• Thank you

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