PRESENTATION ON DIVIDENT POLICY

Presented To: Dr. Shayan javed prop.

Presented By: Shivani Tikoo 206-MBA-13

DIVIDENT
Dividend is that portion of profits of a company which is distributed among its shareholders. Dividends are usually paid in cash.

DIVIDEND POLICY
The term dividend policy refers to the practice that management follows in making dividend payout decisions or, in other words, the size and pattern of cash distributions over time to shareholders

Types of Dividends
There are different types of dividend:
Cash Dividend

most common portion of earnings paid out to shareholders typically on an ongoing basis
give shareholders new shares of stock in lieu of cash as a dividend increases the number of shares outstanding Dividend paid in form of asset instead of cash

Stock Dividend

Property Dividend

DIVIDEND THEORIES
Theory of irrevelance Theory of relevance

Dividend Irrelevance Theory

Investors are indifferent between dividends and retention-generated capital gains. If they want cash, they can sell stock. If they dont want cash, they can use dividends to buy stock. Modigliani-Miller support irrelevance. Theory is based on unrealistic assumptions (no taxes or brokerage costs), hence may not be true. Need empirical test.

Theory of relevance
1. Walters approach- This approach supports the doctrine that divident decisions are relevant and affect the value of firm. This model is based on the relationship between the firms Return on investment i.e r Cost of capital i.e k 3 cases are there i.e r>k r <k r=k

Theory of relevance
2. Gordons approach Based on following assumptions: Firm is an all equity firm No external financing is available Rate of return on investment is consrant Growth rate of firm is also constant

Determinants of Divident Policy

Legal restriction Magnitude and trend of earnings Desire and type of shareholders Nature of industry Age of company Taxation policy Inflation

Refrennces
Financial management : s.k gupta www.google.com www.wikipedia.com www.ask.com www.scribd.com

THANK YOU