StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Dividend Policys of Companies - Essay Example

Cite this document
Summary
Customer Name Instructor Dividend Policy Dividend policy is a type of strategy followed by publicly-traded companies in order to plan out the outflow of dividends to shareholders. This policy comprises of the deportment on whether a company would payout profits as dividends or just retain them as retained earnings…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.3% of users find it useful
Dividend Policys of Companies
Read Text Preview

Extract of sample "Dividend Policys of Companies"

Download file to see previous pages

Companies which are in stages of growth or in initial stages normally have a sparing dividend policy because they reinvest or plow back much of their earnings into the company to experience growth and development (Financial Dictionary 2011). Established companies such as blue chips, Unilever and Wal-Mart being some of them, are inclined to relatively liberal dividend payout policies and grant dividends regularly on quarterly or half-yearly basis. For instance, Unilever (bearing a symbol of UL and listed on NYSE) pays a regular dividend every quarter; the most recent payout has been an amount of US$ 0.

307 on November 8, 2011. Similarly, Wal-Mart paid a quarterly dividend of US$ 0.365 recently on December 07, 2011; a payment every quarter is being followed by the company. Dividends payment do assure shareholder satisfaction but some research, particularly Modigliani and Miller (MM)’s proposition on irrelevance depicts that a company’s performance and profitability is not affected by its dividend policy. Talking from the shareholder perspective, shareholders are more satisfied when they receive regular flows of dividends, even in small amounts but the factor of regularity ensures their confidence in the company.

An irregular or erratic pattern of dividend payouts can lead to bad image for the company and thus an adverse effect on its share in the market. Considering potential investors and their attitude towards a company’s dividend payment patterns or dividend policy, people, according to their stage of investment that is their age, invest accordingly. In the case of stocks, younger or aggressive risk taker individuals invest in growth stocks or stocks that induce capital gains rather than a stream of dividends.

Investors in retirement stages or in the later faction of their lives invest in less risky income stocks which payout dividends on a continuous basis forming a regular fixed income. Mini Case – Topic: Dividend Policy Company Name: Wal-Mart Stores Inc. Description Wal-Mart was founded in the year 1962, with the inauguration of the first Wal-Mart discount store in Rogers, Ark. The company became public as Wal-Mart Stores Inc. on October 31, 1969 and its shares began trading on OTC (Over The Trading) markets in 1970 and were listed on NYSE (New York Stock Exchange) two years later in 1972.

The first dividend was declared on March 26, 1974. Wal-Mart Stores Inc. is the 18th largest publicly listed company according to The Forbes 2010 list of Global 2000 big publicly listed companies (The Forbes 2011). The company caters to customers and members more than 200 million times weekly at retail units more than 9,880 under 60 different banners in more than 28 countries. With the world’s highest sales revenue of US$ 405 billion, it employs more than 2 million employees worldwide. Dividend Policy of Wal-Mart Stores Inc Before discussing about Wal-Mart’s dividend policy, its payout history has to be taken into account; the table below depicts the same: Dividend Payment History – Wal-Mart Stores Inc Year 2010 2009 2008 Dividend Per Share* (DPS) (In US$) 1.09 0.95 0.

88 Total Dividend (In US$ million) 4,217 3,746 3,586 Dividend Yield (IN US$) 2.1% 1.9% 2.1% *These dividends are paid in four portions on a quarterly basis such as US$0.3025 paid on January 31, 2011. The above table depicts the

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Dividend Policys of Companies Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
Dividend Policys of Companies Essay Example | Topics and Well Written Essays - 1250 words. Retrieved from https://studentshare.org/finance-accounting/1440280-dividend-policys-of-companies
(Dividend Policys of Companies Essay Example | Topics and Well Written Essays - 1250 Words)
Dividend Policys of Companies Essay Example | Topics and Well Written Essays - 1250 Words. https://studentshare.org/finance-accounting/1440280-dividend-policys-of-companies.
“Dividend Policys of Companies Essay Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/finance-accounting/1440280-dividend-policys-of-companies.
  • Cited: 0 times

CHECK THESE SAMPLES OF Dividend Policys of Companies

Dividend Policy and Share Price

The stock market in Hong Kong is blooming over the past few years with over 1,300 companies currently listed in the Hong Kong stock market.... The study therefore selects 35 listed companies with five year financial data (total 185 data).... This research study is based on 2 journal articles, “The investigation of relation between Market Ratios and Market price per share of accept companies in Tehran Stock Exchange” (Saeidi and Khandoozi, 2011) and “Dividend policy, trading characteristics and share prices: Empirical Evidence from Egyptian Firms” (Omran and Pointon, 2004)....
15 Pages (3750 words) Essay

Marks & Spencers Dividend Policy

In short, companies can hand back cash to their shareholders either by paying a dividend or by buying back their stock.... (Carlson, 2001)Most companies pay a regular cash dividend each quarter, but occasionally this regular dividend is supplemented by a one-off extra or special dividend.... Frequently companies also declare stock dividends.... (DeAngelo, DeAngelo, & Skinner, Special Dividends and the Evolution of Dividend Signaling, 2000)Many companies have automatic dividend reinvestment plans (DRIPs)....
12 Pages (3000 words) Essay

Distribution of Dividends and Share Repurchases

We will discuss practical examples of companies that give dividends and purchase their own shares.... The paper "Distribution of Dividends and Share Repurchases" highlights that distribution of the dividends to the shareholders is an extremely important issue for public limited companies.... hellip; The payout ratio can be calculated by dividing the company's dividend by EPS.... A dividend policy would be framed for the shareholders in a way that it would set a target capital structure and it would estimate the annual equity needs of the company....
6 Pages (1500 words) Coursework

Analysis of Flow of Funds

As per law, companies could distribute dividends, only out of earnings or reserves of the Company, since otherwise; it would amount to paying back its own capital to the shareholders.... This is because a falling rate of dividend may discourage potential investors and they may become circumspect about investing in such companies.... It would not be a travesty of truth to extol the role that dividend distribution play in the long term growth and sustenance of a Company....
13 Pages (3250 words) Essay

Dividend Policy in Publicly Traded Companies

The paper “Dividend Policy in Publicly Traded companies” analyzes the dividend policy of a firm, which depends on several factors like Firms Financial needs, future growth plans and earnings, and investment opportunities, investors need for income or dividends.... The investors of low dividend paid companies will get their returns through capital gains.... Most of the non-dividend-paying companies are invariably loss-making dogs[4] These companies do not have earnings capacity in their business and are struggling even to pay the dividends shareholders....
3 Pages (750 words) Assignment

Factors That Influence the Dividend Policies for UK Companies

Decisions regarding dividends are guided by the firm's dividend policy.... dividend policy is influenced by the investment… Stockholders have certain requirements that need to be taken into consideration in determining dividend policy or formulation of an appropriate dividend structure. Arriva is the one of the biggest names in the transport service business in the Arriva's balance sheet of last 5 years (from 2004-2008) is densely populated with debt financing and it is obvious because Arriva is a servicing business....
3 Pages (750 words) Essay

Why Companies Pay Dividends

The review "Why companies Pay Dividends?... , based on dividend literature, discusses why companies pay dividends; why investors pay attention to it; do dividends affect an organization's value and how do managers use dividends in the organizational financial management.... Many companies pay dividends and in some, it is a given in the way their organizations are run.... When a firm declares and issues a dividend to its shareholders, this payment is not tax-deductible and, instead, the receipt of it generally is considered to be taxable income to the shareholders (Frenczy 2008, 8-21)....
5 Pages (1250 words) Literature review

Does it matter whether or not firms pay dividends

Being paid on an annual or quarterly basis, a majority of companies pay dividends to the shareholders while others retain their entire profit and reinvest....  Mature companies pay dividends and still retain more profits for reinvesting.... The report will cover the following: dividend yield; dividend coverage ratio; dividend cut; great disciplinarian; method of calculating value.... Some of the notable aspect that the paper has discussed and which investors are keenly looking for before investing includes dividend yield, dividend coverage ratio, and dividend cut....
5 Pages (1250 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us