Dividends

Generally, a constructive dividend is unique from an ordinary dividend in many different ways. A constructive dividend is a form of payment to the shareholders from a corporation which can cause in financial benefits to its shareholder. Section 316(a) defines a dividend as any distribution of property (money, securities, and any other property except stock) that a corporation makes to its shareholders out of its current and accumulated earnings and profits after February 28, 1913. In other hand

Dividend investing is investing in stocks for large cash dividends so that is a regular return on the investment in the form of cash. In fact receiving dividends is very much like collecting interest on money deposited in a bank account. In stock markets, predicting the rise and fall of share prices is very much difficult and in many ways dividend stocks offer a safe way of getting returns. In addition to that dividend stocks also have several other advantages over non-dividend stocks. Let us try

to pay higher dividends to avoid the cost of external financing. While firm value can be increased by financial leverage, too much leverage leads to a shrinking company value as bankruptcy costs start to outweigh tax shield benefits. The higher risk makes debt holders asking for higher returns to compensate them for the increase in bankruptcy risk. Since dividend payments reduce the amount of capital available to secure the debt, many debt contracts include restrictions on dividend payments. Bond

Topic: DIVIDENDS 1. Payments made out of a firm 's earnings to its owners in the form of cash or stock are called: A) Dividends. B) Distributions. C) Share repurchases. D) Payments-in-kind. E) Stock splits. Answer: A Topic: REGULAR CASH DIVIDENDS 2. A cash payment made by a firm to its owners in the normal course of business is called a: A) Share repurchase. B) Liquidating dividend. C) Regular cash dividend. D) Special dividend. E) Extra cash dividend. Answer:

Stock dividend * Definition: * A corporate distribution to shareholders declared out of profits, at the discretion of the directors of the corporation, which is paid in the form of shares of stock, as opposed to money, and increases the number of shares. * A dividend paid as additional shares of stock rather than as cash. If dividends paid are in the form of cash, those dividends are taxable. When a company issues a stock dividend, rather than cash, there usually are not tax consequences

15.3  Dividend Relevance Model  15.3.1  15.3.2  Walter Model  Gordon’s Dividend Capitalization Model  Dividend Decision  15.4  Dividend Irrelevance Theory:  Miller and Modigliani Model  15.5  Stability of Dividends  15.6  Forms of Dividends  15.7  Stock Split  15.8  Summary  Terminal Questions  Answers to SAQs and TQs  15.1 Introduction  Dividends are that portion of a firm’s net earnings paid to the shareholders. Preference shareholders  are  entitled  to a fixed  rate of  dividend  irrespective 

Dividend decision is considered as an integral part of investment decision making to maximize shareholders wealth as suggested by a number of scholars such as Bainbridge (1993), Jensen (2001); Brigham and Ehrhardt (2002); Brealey and Meyer (2003). Considering its importance to the organisation and shareholders, these scholars argued that shareholders return is maximized when company pays out dividend and investors are likely to make some capital gains when the share prices appreciate. Some existing

help management must decide on the form of the dividend distribution, generally as cash dividends or via a share buyback. Various factors may be taken into consideration: where shareholders must pay tax on dividends, firms may elect to retain earnings or to perform a stock buyback, in both cases increasing the value of shares outstanding. Alternatively, some companies will pay "dividends" from stock rather than in cash. The purpose of an optimal dividend policy should be to maximize shareholders’

THE EXCHANGE OFFER6EVALUATION OF THE TRADE-OFF7REFERENCES10INTRODUCTIONA firm's decisions about dividends are often mixed up with other financing and investment decisions. Some firms pay low dividends because management is optimistic about the firm's future and wishes to retain earnings for expansion. Other firms might finance capital expenditures largely by borrowing. All the above are examples of dividend policies which can be defined more precisely as the trade-off between retaining earnings on the

What is Dividend Policy Dividend policy is the set of guidelines a company uses to decide how much of its earnings it will pay out to shareholders. The portion of the earnings that the company gives out are called dividends. A company is expected to pay dividends based on its cash excess and it long term earning power. A company’s management is expected to pay out their surplus earnings in the form of cash dividends or by a share buyback programme. Although the share buyback programmes and dividends