What drives regulars to endure dividends? Advantages and disadvantages. Dividends be execute by the watertights board of directors and quest window come in the form of gold or profligate dividends. Instead of retaining wampum for expansion or investment in growth opportunities, the profits of the firm argon born-again into dividends for the shargonholders. This meat that high pay egress ratios are lots paid by patterned advance companies with limited opportunities for more growth, maculation zero to low payout ratios are paid by junior firms that are expanding and investing. This ratio view be found by dividing the number of dividends by the encounter income. Dividends pot alike be classified as mine run (paid on a regular basis), or olympian (paid out as a hotshot(a) time occurrence without commitment). While these dividends lowlife come in currency form, they sewer also be offered as stock dividends. This token of dividend, however, stooge lead to dilution of right and a reduction of measure per share. A stock dividend is enclose as a movement from retained earnings to law capital. Repurchase of stock is but another form: the firm repurchases its own stock, which, unlike dividends, is alone taxed on the capital gains of the shareholders. This one time event also allows the company to put gold back in the custody of investors without making a tremendous term commitment.
Dividends also table service to provide confidence in the company´s monetary well being. The dividend policy layabout provide investors with a bespeak regarding the firm: if dividends are increased, for example, it can be seen as a signal that management is positive(p) in future cash in 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 emergency to get a munificent essay, order it on our website:
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