What are the factors that influence dividend policy?

What are the factors influencing dividend policy?

The expected dividend payout is influenced by many factors such as after tax earnings, availability of cash, shareholders expectation, expected future earnings, liquidity, leverage, return on investment, industry norms as well as future earnings.

What are the six factors that affect dividend policy?

There are six main factors affecting the dividend policy of a firm. These are legal constraints, contractual constraints, internal constraints, growth prospects of a firm, owner considerations, and market considerations.

What is dividend factor?

Dividend Factor is the dividend rate per share for a dividend period.

What are the factors affecting dividend decision Class 12?

Factors affecting dividend decision :

  • Amount of Earnings. Dividends are paid out of current and past earnings. …
  • Stability in Earnings. …
  • Stability of Dividends. …
  • Growth Opportunities. …
  • Cash Flow Position. …
  • Shareholders’Preference. …
  • Taxation Policy. …
  • Stock Market Reaction.

Which of the following external factors affect the dividend policy?

1) Dividend payout rate- defined as the ratio of dividends per share and earnings per share. 3) Unregulated firms in this result are compared with earlier studies. … 5) Amount of profit to be retained in the firm.

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How do you factor dividend yield?

On a stock, the formula for dividend yield is the amount of the annual dividend payments divided by the share price of the stock. Then multiply by 100 to turn the result into a percentage.

How do you calculate the dividend factor?

Another way to calculate the dividend payout ratio is on a per share basis. In this case, the formula used is dividends per share divided by earnings per share (EPS). EPS represents net income minus preferred stock dividends divided by the average number of outstanding shares over a given time period.

What are the types of dividend?

There are following types of dividend options with the company.

  • Cash dividend.
  • Stock dividend.
  • Property dividend.
  • Scrip dividend.
  • Liquidating dividend.

What are dividend decisions mention any four factors that affect dividend?

(i) Earning: The dividend is paid out of the present and reserved profits. Therefore, greater amount of total profit will ensure greater dividend. (ii) Stability of Earnings: A company having stable earnings is in a position to declare more dividends and vice-versa.