The board of alKhalili Industries is considering a new dividend policy that would set dividends at 60

Question:

The board of alKhalili Industries is considering a new policy that would set dividends at 60 percent of earnings. The recent past has witnessed earnings per share (EPS) and dividends paid per share as follows.
Year EPS Dividend/share
2006..........US$1.75..................US$0.95
2007...............1.95........................1.20
2008...............2.05........................1.25
2009...............2.25........................1.30
Based on alKhalili's historical payout ratio, discuss whether a constant payout ratio of 60 percent would benefit shareholders.
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...