Please read the question below and then provide your response in your reply. Your response must meet the following criteria. Quality of Post: Fully answers the question(s); Post is substantive and shows a deep level of understanding of the concepts; Post synthesizes, applies, and/or integrates concepts effectively.

Connections to Content: Post includes obvious and direct connections to competency content; May include direct/indirect quotes and references the content from the competency.

Originality: Post is original and demonstrates an independent thought process that is creative and individualized. Post adds value by raising novel points or providing new perspectives.

Writing Mechanics: Post is concise and clearly written in an academic tone; Sentences are complete; spelling, grammar and punctuation are correct. Question: Based upon the concept of Optimal Dividend Policy, why do some firms pay no dividends while others consistently pay dividends? In other words, what are the primary drivers behind the dividend decision? For this question, you can start writing about the supporters of dividends point out that a large dividend distribution is crucial for investors since dividends guarantee a company's financial stability. Over the past few decades, businesses that have consistently paid dividends have typically been among the most stable businesses. A corporation that offers a dividend draws in investors and increases demand for its shares as a consequence. A decrease or rise in dividend payments, however, may impact a security's price. If a company stops paying dividends after a lengthy period of time, it will have a negative impact on the share price. On the other hand, businesses that have raised their dividend payments or adopted new dividend policies will probably experience an increase in the value of their stock. Dividend payments are also seen by investors as a sign of a company's strength and a sign that management has high expectations for future profits, both of which raise the stock's appeal. As demand grows, the value of the company's shares will climb. A company's desire and capacity to do so over time is solid proof of its financial stability. Paying dividends conveys a clear and powerful statement about its future performance and prospects. When you answer, make sure to mentionresidual theory of dividends, stable dividend, constant dividend payout ratio, low dividend plus extra policy, dividend yield.

• Dividends can either be a residual, constant percentage of earnings or a constant amount per share.
• An announcement to increase dividends may have a positive impact on the value of the stock as the increase sends a positive message or signal to the investors regarding future growth prospects or reduced systematic risk.