day / date:

Clotts

arget Ryout Ctio laget pPercertage of net ikome faid out as

cash dividerds

Optimal Dvdend folky: The dividend policy that srkes a balane bebween
Cument dividenda and fture : qrouwth andmaximizes Hefirms stoch prie.

Divderd Laelevane Thesry The theoy that a fiam's dividenck poliy

bs p efect n itk valee ot sDck or Cost of capital

Vholer his set of assmphios, MM proved tat a in's value is only

detunined by it basie eaminn pouwer ad business nisk

MM Acuptiors
’ No taxes padon dividerd1
No transacioncast
ntormction
2 Eveayone has fel

* Jvators frefer Alicies ttat hel the ecue toey and teyacuertt
attes
retters n e l worlel.
ui i wky olividend felcy
Bat diu. poliy doesnot t
* Mm Divj derd Irelavence Iheoes aho say
rate of retum Gn ts.
reg
Why Peode reter Ririolendi Steady Stran bf incoe, No trat: coaly.

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AÇHAZ wwwkaghazpk
 day / date:

Signaizg Heothethi : Thetheony that. ;arestors. re rc. cdeiclend

clangy as Signes of mageneat's Guning foreiast
Cdientele t Drterent qvoups of stakeholeer pretr dfentdiv.

. ":..

Cientele fet : Todaey of ims toattat aset ot inveators who like

its dividend pol cuy

CateigTheuty Theer hat sieygesh inves to sprferenes for oliv.

Vay ove time ond ta corroti's adapt their idividod
poiiel to cate to he curenteesies ot investors.

Resideal Divideod Model:

Dividend Net Iomei CCTanget Equky Rets) (Total Gpitel Budye].

Low-Eauau-Dividond-Plus- Extra, The policy ot annaunio a low,regular diidod

tat an be meitnel no mater what and ther, when tinei are qood, payjinga
desiaaked "extra" clividend
Fauaianss ae not te primay 'detemiant of dividends. ashlo
inporert
pauyot
earnigs puyont volile
aShlopayont

AGHA2
KAGHAZ
www.kaghazpk
 day / date:

orfor each year re

’ Residual Dividend. Molel not. suitaLe for long run'as
flchating dividends -
Most tuge fr
Solvkon:
)Estimate easnings and investment cpportunties for the nt Eyra ar se.
2) Use Hee forcasted iato. to find auy. dividends that would be paid
uaing the resdalmodet dujng the planig peiod
)Set a tarqet payout policy kased on projected dats
+ Fiim shoald uwe te raidal policay to cet teir tae bng-(un tvget
peyct als, but not ya quide to the payout in any ce year.

EPS

’ The hghet the pyput.the ciskier the di vidlend

’ When arnings are nsuffiient to Cover the div iclends Cash fleuws
enabledd the company to naintein astable dvido poliu:

ACHA2 KAGHAZ
wwwkaghazpk
 day /date:

3c Paumert froxedsres

) Decdaiation Date The Dabeon wich a fitms dicectos isve astatemeat,

declaring a divdend
2 Holderoof Record Date If the company Wsts the stockbelder áu án ounêr
On tis date, then the stockhdde leceives the dividend
to the
)E- Diwidend Date : The date On which tel current divrlendno lorger
acompnia stoch; Usually 2 day betor e holder-ot-recorcl date.

) Pagnent Date: Ihedae

he clate on hiih firns mai divtend dehs.

S4 Dividend Reiovestaent Pans &

into Hhe
Pars that enabe stocolders to qutomatially reinvest
CPmpang
’Sharehden sGll hae to pa tax on te diidend

O stocde : Bahs bay fom open markek

Nes Soeh s Conpay rajse newEty

S- SFfactos lafuencing Dividend lky i

Costiaiak payment
Bond ndentures Debt contracts limit dividend

Reuiiements Cofie in regulated indestd m ue

) Requlatory
diet oc knint limi takiy to retIn Cash
ACHA2
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 day/ date:

Aehued stocholdes fiak.

Stoce Restrichios.
) Prefeed
Divicdend
Acconting jule ot RE
9.Tpaimot of Capital. Rule
always
can dy be Aid wilh calh.
ada Div
) Araliablty of ash
Accumlatcd Easnings.If IRS finds
mproperly
) Pena lty Tax on ficm'sdividond payout atio u delitertely
out tat the stocholder to aod pesonal taet
beina kept low or..
then penalties.

Tavestment Cppodenities
Opportoniiea: 1f hgh, then d
) No. cf Proitabe Investent ratio and.vise versa.
low dividend tarqet payput

Acel erating or Debayioq

Deiayin rojects.: If this
4 Possibility of can adhere to a stabe dividend piy.
abikty s hiqh, then fim
Alternative Source of Capital :
Floa tation osts hi_h > low payout abio
) Cost of Selling New Stock
Floatatiern Coss Low’ tig h payat

Ability to Substitute Debt for awity: f a fim can adjust

shaey affe
is debt to eity ratio debt roio) withot thrugh bonowina
wt, tten it.can Rey. hgher di cland
KAGHAZ
wwwkaghazpk
 day/ date:

3) Control.

Effectd ofDividend Polis en fi s: Pequired Rekrn.

Factbn teconsido,

Stock Qividend qnd Stock Splits

Stock Split : Tnu eae the number of sh are outstanding A 2fo1

spit ould dDuble the amount of Shae eah stochholder hes -
+ucually used after sharpua-yo to praduce
Stock Dirilends : A diuden d Paid in bhe torm of additonsl
shares