Page 12 - PowerPoint Presentation

THE DIVIDEND DECISION

Dividend policy in practice and dividend stability

• Directors tend to believe that a stable dividend policy is in the interest

of shareholders.

• As a result, they will aim to maintain a constant or gradually growing
dividend through time, regardless of earnings’ fluctuations.

• In order to achieve dividend stability, companies may pay low regular

dividends that can easily be maintained. On top of this, they will then

make extra dividend payments in good years. This would be
designated as a special dividend, with no assurance that it will be

repeated (thereby creating no expectations).

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