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Dividend: meaning, valuation and policies in different types of markets


Kursinis darbas anglų kalba. Dividendai. Introduction. Meaning of a dividend. Why companies pay dividends. How dividend is determined. Type of dividends. The process of paying dividends. Dividend decision. Dividend policy in perfect capital markets. Dividends as residual. Dividend patterns and the valuation model. Tradicional view of the dividend decision. An arbitrage criticism. Dividend policy in an imperfect market. Clientele effect. Dividends as signals. Tax considerations. Double taxation - the political debate over dividends. Measures of the dividend policy. Drips - dividend reinvestment plans. Benefits of enrolling in a dividend reinvestment plan. Conclusion. Management beliefs about dividend policy.


Once a company makes a profit, they must decide on what to do with those profits. They could continue to retain the profits within the company, or they could pay out the profits to the owners of the firm in the form of dividends. Once the company decides on whether to pay dividends, they may establish a somewhat permanent dividend policy, which may in turn impact on investors and perceptions of the company in the financial markets. What they decide depends on the situation of the company now and in the future. It also depends on the preferences of investors and potential investors.
All the time many corporations connects their hopes of financial activities with reinvested profit, which also is their work financial source. Financial dividend payout ratio decreases the size of reinvested profit, and the dividend decision is also fund decision. The dividend policy involve the dividends stability and other factors influencing payments of dividend.
In my work I’ve analyzed the meaning of dividend, dividend decision, valuation and policies. Portrayed the dividend policies in perfect capital markets, where dividend decision can be seen to be irrelevant and the shareholder receives his annual return in two elements: the dividend and the capital gain. The dividend residual model, the traditional view of dividend decision and arbitrage involvement shows here in what proportion of a firm’s distributable cash flow might be paid out as dividends. While in imperfect capital markets the clientele effect, taxes, transaction costs and imperfect information introduced, points out the importance for the dividend decisions.
The examples, calculations and graphs in this works helps better understand the dividend decision and how it influence the management decisions on the dividends policies.
The dividends reinvestment plans also described in the work gives the opportunity for the shareholders automatically reinvest their dividends in shares of the company’s common stock, get more stock than cash.
The following goals must be kept in view in establishing a dividend policy:
– Avoid cutting back on positive NPV projects to pay a dividend
– Avoid cutting dividends
– Avoid issuing new equity
– Maintain a target D/E ratio
– Maintain a target dividend payout ratio.
And this is described in the analysis below. ...

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Tinklalapyje paskelbta2005-11-25
DalykasFinansų kursinis darbas
TipasKursiniai darbai
Apimtis26 puslapiai 
Literatūros šaltiniai7
KalbaAnglų kalba
Dydis393.16 KB
Viso autoriaus darbų1 darbas
Metai2005 m
Mokytojas/DėstytojasAsist. I. Graužinytė
Švietimo institucijaVilniaus Gedimino Technikos Universitetas
FakultetasVerslo vadybos fakultetas
Failo pavadinimasMicrosoft Word Dividend meaning valuation and policies in different types of markets [speros.lt].doc

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  • Kursiniai darbai
  • 26 puslapiai 
  • Vilniaus Gedimino Technikos Universitetas / 4 Klasė/kursas
  • Asist. I. Graužinytė
  • 2005 m
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