TYPES OF DIVIDEND POLICY
Dividend policy depends upon the nature of the firm, type of shareholder and profitable position. On the basis of the dividend declaration by the firm, the dividend policy may be classified under the following types:
• Regular dividend policy
• Stable dividend policy
• Irregular dividend policy
• No dividend policy.
Regular Dividend Policy
Dividend payable at the usual rate is called as regular dividend policy. This type of policy is suitable to the small investors, retired persons and others.
Stable Dividend Policy
Stable dividend policy means payment of certain minimum amount of dividend regularly. This dividend policy consists of the following three important forms:
Irregular Dividend Policy
When the companies are facing constraints of earnings and unsuccessful business operation, they may follow irregular dividend policy. It is one of the temporary arrangements to meet the financial problems. These types are having adequate profit. For others no dividend is distributed.
No Dividend Policy
Sometimes the company may follow no dividend policy because of its unfavourable working capital position of the amount required for future growth of the concerns.
Dividend policy depends upon the nature of the firm, type of shareholder and profitable position. On the basis of the dividend declaration by the firm, the dividend policy may be classified under the following types:
• Regular dividend policy
• Stable dividend policy
• Irregular dividend policy
• No dividend policy.
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Regular Dividend Policy
Dividend payable at the usual rate is called as regular dividend policy. This type of policy is suitable to the small investors, retired persons and others.
Stable Dividend Policy
Stable dividend policy means payment of certain minimum amount of dividend regularly. This dividend policy consists of the following three important forms:
- Constant dividend per share
- Constant payout ratio
- Stable rupee dividend plus extra dividend.
Irregular Dividend Policy
When the companies are facing constraints of earnings and unsuccessful business operation, they may follow irregular dividend policy. It is one of the temporary arrangements to meet the financial problems. These types are having adequate profit. For others no dividend is distributed.
No Dividend Policy
Sometimes the company may follow no dividend policy because of its unfavourable working capital position of the amount required for future growth of the concerns.
Types Of Dividend Policy
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Tuesday, June 27, 2017
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