DIVIDEND POLICY

SUBMITTED BY YATIN ARORA YASH SONI KRISHAN ATESH RAMESH MEGHWAL

Concept
Dividend is derived from the Latin word Dividendum which means that which is divided Its distribution is made out of net profit after deducting all expenses. It may be defined as divisible profits which are distributed amongst the members of a company in proportion to their shares in a manner as is perceived by law.

Company cannot declared dividend until n unless

There is sufficient profit in the company Recommendation of the board of directors An acceptance of shareholders in he annual general meeting

Dividend decision and Dividend policy

It is the determination of the percentage of earnings to be paid by the company in cash to its shareholders as dividend. The percentage of earnings to be retained for financing its long term growth. Dividend decision regarded as residual decision.

Essentials of sound Dividend Policy

Distribution of dividend in cash Initially lower dividend Stability Gradual increase in dividend Dividend out of earned profits

Factors Affecting Dividend Policy

Internal Factors Nature of Earnings Future funds requirements Liquidity of funds Shareholders preference Control motive External Factors General state of economy Firms access to capital market Legal restrictions Contractual restrictions Economic and tax policies

Types of Dividend Policy

Stable or regular dividend policy a) Constant dividend per share b) Constant percentage of net earnings Policy of regular plus extra dividend Policy of regular bonus dividend Policy of irregular dividend Policy of no immediate dividend

FORMS OF DIVIDEND
Preference Dividend Equity dividend Interim dividend Cash dividend Scrip Dividend Stock Dividend/Bonus Dividend