Dividend Policy

Topics: Dividend, Investment, Finance, Rate of return / Pages: 7 (1691 words) / Published: Jan 23rd, 2013
Dividend policy
Dividend policy is concerned with taking a decision regarding paying cash dividend in the present or paying an increased dividend at a later stage. The firm could also pay in the form of stock dividends which unlike cash dividends do not provide liquidity to the investors, however, it ensures capital gains to the stockholders. The expectations of dividends by shareholders helps them determine the share value, therefore, dividend policy is a significant decision taken by the financial managers of any company.

|Contents |
|1 Concept |
|2 Relevance of dividend policy |
|2.1 Walter's model |
|2.1.1 Assumptions of the Walter model |
|2.1.2 Model description |
|2.1.3 Mathematical representation |
|2.1.4 Criticism |
|2.2 Gordon's Model |
|2.2.1 The Assumptions of the Gordon model |
|2.2.2 Model description |
|2.2.3 Mathematical representation |
|2.2.4 Conclusions on the Walter and Gordon Model |
|2.3 Capital structure

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