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Investment Dictionary


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Dividend Policy

 

dividend policy is a company’s written practice that describes dividend payments scale over time. Dividend policy may be as short as target dividend payout ratio or also include some reaction to a changing environment factors. 

 

If company doesn’t have a dividend policy it doesn’t mean that it can’t pay dividends. It means only that company does not want to give some long term commitments for investors, which is not very promising. Anyhow, as dividends lost its importance in investing, dividend policy also do not play very significant role and does not affect the value of investment. 

 

If company wants to change its dividends policy, it has to be some serious reasons for that. One of them can be that company expects (or faces) cash flow problems if dividend payout ratio to be lowered. 

 

 






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