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THE DIVIDEND DECISION
Overview
• Surprisingly, successful companies display widely divergent
dividend policies. Here, some companies choose to pay
strong, consistent dividends (e.g. Kumba), whilst others
choose to not pay any dividends at all (in the spirit of
Warren Buffet and Apple Inc.). This may lead one to predict
that dividend policy is irrelevant.
• Yet, statutory requirements, shareholder preferences and
the effect of taxation make this a more complex matter.
• Besides, regardless of the policy, you can never please
everyone: somewhere, somehow there is likely to be a
disgruntled person in the form of a shareholder, an
employee, a director, or… (fill in the blank).
• This learning unit refers to inter alia some of the different
methods and forms of dividends, and factors to be
considered before setting a dividend policy.
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