Dividend Policy

Topics: Stock market, Stock, Dividend Pages: 13 (3227 words) Published: December 14, 2009
Report on Dividend policy

Case analysis on Bank

A dividend is a usually distributed in cash form to stock holders of a corporation approved by the board of director. It may also include stock dividend or other forms of payment. A stock dividend represents a distribution of additional shares to common stockholders. Dividends are only cash payments regularly made by corporations to their stockholders.

The dividend policy such as the payment of dividend affects the market price of share. If there is a debate in this issue, this theory is commonly accepted. In this report the relationship between dividend and the market price of share is proved in the banking sector of Bangladesh. But it is also revealed that dividend is not the only variable to affect share price.

The result shows a significant relationship between dividend and share price. Some other factors such as profit, EPS, growth rate, retained earnings, money supply etc.


Literature Review3
Overview of the Companies9
Related Financial Data Analysis


Conclusion & Recommendation25

As Bangladesh is a developing country, the corporate culture is growing very slightly in our country. Dividend policy is a major financing decision that involves with the payment to shareholders in return of their investments. Every firm operating in a given industry follows some sort of dividend payment pattern or dividend policy and obviously it is a financial indicator of the firm. Thus, demand of the firm’s share should to some extent, dependant on the firm’s dividend payment pattern. Many investors like to watch the dividend yield, which is calculated as the annual dividend income per share divided by the current share price. The dividend yield measures the amount of income received in proportion to the share price. If a company has a low dividend yield compared to other companies in its sector, it can mean two things: (1) the share price is high because the market reckons the company has impressive prospects and isn't overly worried about the company's dividend payments, or (2) the company is in trouble and cannot afford to pay reasonable dividends. At the same time, however, a high dividend yield can signal a sick company with a depressed share price. Dividend yield is of little importance for growth companies because, retained earnings will be reinvested in expansion opportunities, giving shareholders profits in the form of capital gains. So, the study will investigate the relationship between dividend and the market price of share Bangladesh. In our detailed study, we will examine with some real life sample (five banks) that whether the dividend policy has any effect on the firm’s share price determinants are many in members other than the dividend payment pattern, we just focus on the specific factor; the dividend policy.

Objective guides the thinking of any set of operation either directly or indirectly. It works as a lamp-post in a dark night to find out the right way. Our objective in this study is to find out whether the dividend policy has any impact on share price of that company. For this purpose we have given a term paper named, “Impact of Dividend on Share Price”. And that’s why though there are many variables creating impact on share price, our main focus is on dividend & its policy. Besides, as students of MBA program, the objective of this study is to acquire knowledge about share price, share price, share market, dividend, and policy of company on retention on dividend payment, through our field work. METHODOLOGY

Primary Data: Primary data is collected by interviewing with some officials of these banks. Md. Abu Tayeb (Senior Vice President), Mohammad Jashim Uddin (Senior Asst. Vice President) and Md. Monowar Hossain (Senior Officer) all these persons are the...
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