TYPES OF DIVIDEND POLICY

REGULAR DIVIDEND POLICY

NO DIVIDEND POLICY

DIVIDEND POLICY

STABLE DIVIDEND POLICY

IRREGULAR DIVIDEND POLICY

REGULAR DIVIDEND POLICY

Payment of dividend at usual rate is termed as regular dividend policy Advantages It establishes profitable record of the company It creates confidence amongst shareholders. It stabilises the market value of share. The ordinary shareholders view dividend as a source of funds to meet their day-to-day living expenses.

(1) Regular Dividend. By dividend we mean regular dividend paid annually, proposed by the board of directors and approved by the shareholders in general meeting. It is also known as final dividend because it is usually paid after the finalization of accounts. It sis generally paid in cash as a percentage of paid up capital, say 10 % or 15 % of the capital. Sometimes, it is paid per share. No dividend is paid on calls in advance or calls in arrears. The company is, however, authorised to make provisions in the Articles prohibiting the payment of dividend on shares having calls in arrears. (2) Interim Dividend. If Articles so permit, the directors may decide to pay dividend at any time between the two Annual General Meeting before finalizing the accounts. It is generally declared and paid when company has earned heavy profits or abnormal profits during the year and directors which to pay the profits to shareholders. Such payment of dividend in between the two Annual General meetings before finalizing the accounts is called Interim Dividend. No Interim Dividend can be declared or paid unless depreciation for the full year (not proportionately) has been provided for. It is, thus,, an extra dividend paid during the year requiring no need of approval of the Annual General Meeting. It is paid in cash.

DIVIDEND PAYMENT-RETENTION DECISION

A firms dividend decision include two basic components