Dividend Policy

Dividend Policy is a financial decision that refers to the proportion of the firm’s earnings to be paid out to the shareholders. The goal of the policy is to aim for steady and predictable dividend payouts every year, which is what most investors are seeking. It is also highly volatile, but for some investors, it is the only acceptable dividend policy that a company should have. There are three types of dividend policies: a stable dividend policy, a constant dividend policy and a residual dividend policy.