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Dividend Policy

Dividend Policy

“Dividend policy involves the decision to payout earnings or to retain then for reinvestment in the firm.” – Weston and Brigham

Dividend policy refers to the choice of firm to distribute its net earnings to shareholders, or to invest them in the business.” – Khan and Jain

“A company’s policy regarding distribution of its profits between distributions to shareholders and re-investment or reserve.” – Shyamal Banerjee

Stable Dividend Policy:

“Stability of dividends some items means regularly in paying some dividend annually, even though the amount of dividend may fluctuate from over years and may not be related with earnings.” – I. M. Pandey


Stock Dividend or Bonus Dividend:

“A stock dividend is the payment of additional stock to shareholders, represents nothing more than a recapitalization of a company, a stockholders proportional ownership remains unchanged.” – James C. Van Horne

“An issue of bonus share represents a distribution of shares in addition to the cash dividend to the existing shareholder.” – I. M. Pandey

“A stock dividend is the payment to existing owners of a dividend in form of stock.” – L. J. Gitman

Stock Split:

“A stock split is a method commonly used to lower the market price of firms stock by increasing the number of shares belonging to each shareholder.” – L. J. Gitman

“A share split is a method to increase the number of outstanding shares through a proportional reduction in the par value of the share.” – I. M. Pandey

Reserve Stock Split:

“Reserve stock split is a stock split in which the number of shares outstanding is decreased.” – James C. Van Horne

Stock Repurchase:
“Stock repurchase is a transaction in which a firm buys back shares of its own stock.” – E. F Brigham and J. F. Houston

Dividend Reinvestment Plan (DRIP):

“Plan that enables stock holders to use dividends (received) on the firms stock to acquire additional shares.” – L. J. Gitman

DRIP is a plan that enables a stockholder to automatically reinvest dividends received back into the stock of the paying firm.” – E. F. Brigham

N.B: You can also read more Definition.

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