Student’s Name
Professor’s Name
Course Title
Date
Description of the company’s dividend policy.
The company’s policy is quite friendly and reasonable. As on the date of declaration, the board of director’s resolve to pay a particular dividend amount in cash to investors holds the company’s stock to a specific date (Chintrakarn 64.). It has a policy that sees shareholders concerned with the dividends of the firm. The profits have a significant bearing on the share prices of the firm.
It is also evident the firm’s returns are more than the cost incurred in running the company, meaning the firm will retain its earnings to finance projects, and shareholders will be paid residual dividends i.e., Money left after the funding of all potential investments in existence. Thus, one can see the dividend payout fluctuates from year to year, depending on the availability of investment opportunities.
If the policy is upheld, the company will see itself regularly provide shareholders loyalty, as companies with a history of dividend payments are expected to maintain those payouts if possible (Renneboog 100). The benefit of this policy is, it allows a company to use their retained earnings or residual income to invest back into the company, or into other profitable projects before returning funds to shareholders in the form of said dividends.
Investors here are provided with consistent realized income every quarter, helping the company’s financial health and shareholder value. Through constant early communication, the company indicates a positive future and an equally strong performance. The ability and the willingness of a company to pay stable dividends over a reasonable period and even increase them steadily gives a clear indication of the company’s steadfast policy.
Market value of equity debt= 0.253983000392343
Total market value of firms financing=14.19431 E=0.25398300392343
w=0.019385824 E=0.02115965 14.19431
d=99.480 p=0.26640067
WACC=w+d+P+E
4
0.019385824+99.480+0.26640067+0.017893297=99.7836797991
WACC= 99.7836797991 =24.9459199477
4
References
Chintrakarn, Pandey, et al. “How do powerful CEOs view dividends and stock repurchases? Evidence from the CEO pay slice (CPS).” International Review of Economics & Finance 58 (2018): 49-64.
Renneboog, Luc, and Peter G. Szilagyi. “How relevant is dividend policy under low shareholder protection?.” Journal of International Financial Markets, Institutions and Money 64 (2020): 100776.