Cinergy is a utility company that provides gas and electric service in Ohio, Kentucky, and Indiana. The

Question:

Cinergy is a utility company that provides gas and electric service in Ohio, Kentucky, and Indiana. The company’s yield is 6.6 percent. Starbucks, a well-known retailer of coffee products, does not pay dividends, resulting in a yield of 0.0 percent. Both companies are approximately the same size with market values of $5 billion.

Required:
1. Based on this limited information, why do you think the policies of the two companies are so different?
2. Will the two companies attract different types of investors? Explain.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...