Stability of Dividend Homework Help

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Firstly, Dividend is distribution of a portion of money from the company’s earnings and profits to its shareholders which is decided by the board of directors. Stable dividends have quite a positive impact on the market price and that is why the stability of dividends is the most favourable policy of the management of some hundreds of companies as well as the shareholders. Stable dividends are valued higher than the fluctuating ones by these shareholders. Stability of dividend can also be concluded as paying annually to the shareholders may not be related with earnings. Stability of Dividend Homework Help shall throw an insight into this.
 

Forms, Advantages and Disadvantages of Stability of Dividend

 
Stability can be distinguished into three distinct forms: constant dividend per share, constant percentage of net earnings, small constant dividend per share plus extra dividend. To know more about the above mentioned forms, students can refer to Stability of Dividend Homework Help.
 
• Constant Dividend per Share- This policy involves paying a fixed amount of share as dividend annually to the shareholders in spite of the differences in their earnings. Those companies who need dividend money to meet their needs and operating expenses usually follow this policy since any fluctuation in the increase or decrease in the market value is the least matter of concern for them. This leads to long run demand, automatically stabilizing the market share.
 
• Constant Percentage of net Earnings- some companies follow the policy of constant pay-out ratio i.e. paying a fixed amount of net earnings every year. Here the amount of dividend will fluctuate in direct proportion to earning. Since this policy is related with a company’s ability to pay the dividends, it might be supported by the management.
 
• Small Constant Dividend per Share plus extra Dividend- This form allows a company to pay a constant amount of dividend regularly without a default as well as allows flexibility for supplementing the income of shareholders if the company’s earnings are higher than usual. Basically here a small amount is fixed to be paid in the slightest possibility of missing a dividend payment and extra amount will be paid in the situation of prosperity.
 
Few advantages and disadvantages of the stability of dividend given in Stability of Dividend Homework Help are
 
The advantages of the stability of dividend are as follows
 
• Resolution of investor’s uncertainty
• Investor’s desire for current income
• Institutional investor’s requirements
• Raising additional finances
 
Few disadvantages of this policy from both shareholders as well as company’s point of view given in Stability of Dividend Homework Help are as follows
 
• Once a dividend policy is accepted, it cannot be changed or modified easily without affecting the financier’s attitude and the financial position of the company.
• A cut in dividend is equal to a cut in the salary.
• The rate of dividend should be fixed at a conservative amount so that it will be easy to be maintained for several years.
 

Features of Stability of Dividend Homework Help are

 
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• Timely availability of assignments.
• Proper representation of data.
• Advantages, disadvantages along with different forms of dividend policy are explained.
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