Compare and contrast the following dividend policies: constant payout ratio dividend policy and the constant dollar payout dividend policy. Which policy do most public companies actually follow? Why?
Answer to relevant QuestionsWhat is a low-regular-and-extra-dividend payout policy? Why do firms pursuing this policy explicitly label some cash dividend payments as “extra”? Around the world, utilities generally have the highest dividend payouts of any industry, yet they also tend to have massive investment programs which they finance using external sources. How do you reconcile high payouts and ...General Manufacturing Company (GMC) follows a policy of paying out 50% of its net income as cash dividends to its shareholders each year. The company plans to do so again this year, during which GMC earned $100 million in ...Investor A recognizes $100 in dividend income that is taxed at a rate of 20%. Investor B also wants to recognize the same after-tax revenue as investor A, but investor B owns stock that does not pay dividends. If investor ...Super-Thrift Pharmaceuticals Company traditionally pays an annual dividend equal to 50% of its earnings. Earnings this year are $30,000,000. The company has 15 million shares outstanding. Investors expect earnings to grow at ...
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