Question

What is Dividend Payout Policy

Answer 1

Dividend payout policy refers to the strategy that a company uses to determine how much of its earnings it will distribute to shareholders in the form of dividends. This policy is set by the company's board of directors and outlines the frequency and amount of dividends that will be paid out to shareholders. The dividend payout policy may also take into consideration various factors such as the company's financial performance, cash flow, growth prospects, and capital needs. Companies typically have three main types of dividend payout policies: stable dividend policy, target payout ratio policy, and residual dividend policy.