Duke Energy is a utility company that provides gas and electric service in North Carolina, South Carolina,

Question:

Duke Energy is a utility company that provides gas and electric service in North Carolina, South Carolina, Ohio, Kentucky, and Indiana. The company’s dividend yield is 6.6 percent. Starbucks, a wellknown retailer of coffee products, does not pay dividends, resulting in a dividend 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 dividend 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...