|
|
Dividend policy |
|
|
|
 Home Site Map Add Term Search About Us Contributors |
Dividend policyStandards by which a firm determines the amount of money it will pay as dividends.Dividend policy Similar MatchesAccumulated dividendAccumulated dividendA dividend which is due to holders of cumulative preference shares but which has not yet been paid. The amount is carried forward on the company's books as a liability until it is paid. Traditional view (of dividend policy)Traditional view (of dividend policy)An argument that, "within reason," investors prefer higher investors to lower dividends because the dividend is sure but future investors are uncertain. Dividend growthDividend growthThe amount by which a company's yearly dividends grow compared with the previous year. Dividend Discount Model (DDM)Dividend Discount Model (DDM)A method to value the common stock of a company that is based on the present value of the expected future dividends. Dividend discount modelDividend discount modelA way of valuing a share based on the net present value of the dividends that you expect to receive in the future.The simplest version of the model assumes that the company's dividend rate remains constant. The 'fair' price of the share is the dividend (in pennies per share) divided by the required rate of return. So if you want 10% a year from your shares, the value of a company paying a 7p dividend is 70p. If you think a return of 8% is satisfactory, the value of the same share is 87.5p.A more complex model assumes that the dividends of the company grow at a consistent rate. The fair price to pay is the next dividend divided by the required rate of return minus the rate at which dividends are expected to grow. So if the 7p dividend is expected to grow at 5% per year, an investor requiring an 12% return would value the shares at (7p x 1.05) divided by (0.12 - 0.05)= (7.35p) divided by (0.07)= 105p Further Suggestionscum dividendDividend Discount Return Dividend Dividend Disbursing Agent Ex stock dividends Dividend trade roll or play Participating dividend Dividends payable Dividend payout ratio Dividend capture Omitted dividend Dividend clientele Dividend Order With dividend Interim dividend Indicated dividend dividend yield Unpaid dividend Selling dividends Dividend requirement extra dividend interim dividend Income dividend Year end dividend Dividend rollover plan |
|
|
|