Dividend policy is the set of guidelines a company uses to decide how much of its earnings it will pay out to shareholders. Dividend refers to that portion of a firm’s earnings which are paid out to the shareholders. Dividend policy is concerned with financial policies regarding paying cash dividend in the present or paying an increased dividend at a later stage. Whether to issue dividends, and what amount, is determined mainly on the basis of the company’s unappropriated profit (excess cash) and influenced by the company’s long-term earning power.
Dividend Policy Decision
